Financial assets - Accounting Treatment

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So we have these 3 categories..

Category Initial Measurement Year-end Measurement Difference goes where?
FVTPL FV FV Profit and Loss
FVTOCI FV FV OCI
Amortised Cost FV Amortised Cost -

Initially both are measured at FV.

Now let's look at what happens at the year-end..

FVTPL accounting treatment

  1. Revalue to FV

  2. Difference to I/S

FVTOCI accounting treatment

  1. Revalue to FV

  2. Difference to OCI

Amortised cost accounting treatment

  1. Re-calculate using the amortised cost table

    (see below)

An Example:

8% 100 receivable loan (effective rate 10% due to a premium on redemption)

Amortised Cost Table

Opening Balance Interest (effective rate)  (Cash Received) Closing balance
100 10 (8) 102

The interest (10) is always the effective rate and this is the figure that goes to the income statement.

The receipt (8) is always the cash received and this is not shown in the income statement - it just decreases the carrying amount

Any expected credit losses and forex gains/losses all go to I/S

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