ACCA SBR ^UK Syllabus C. Reporting The Financial Performance Of A Range Of Entities - UK SBR: Other financial instruments - Notes ^{4 / 24}

Other financial instruments

These are financial instruments that do not meet the criteria to be classified as basic.

• INITIAL MEASUREMENT

  Fair value 
  Transaction costs expensed 

  Exception: If subsequently measured at amortised cost or cost less impairment measure at FV + transaction costs

• SUBSEQUENT MEASUREMENT

  Fair value (gains and losses in P/L)

Exceptions

(a)Investments in equity instruments that are not publically traded and whose fair value cannot be measured reliably. These are measured at cost less impairment. 

(b) Financial instruments not permitted by law to be measured at FVTPL. These are measured at amortised cost. 

(c)Hedging instruments in designated cash flow hedge and net investment hedge arrangements. These are still measured at fair value, but the portion of the gain or loss that is determined to be an effective hedge is recognised in other comprehensive income.

Measuring fair value

(a)   If an observable market price is available, use that price. 

(b)   If an observable market price is not available, measure the fair value using entity-specific observable market data such as: 

(i) A recent transaction for an identical asset; or 
(ii) A recent independent fair valuation of the entity or its principal assets. 

(c)   If an observable market price is not available and obtaining a reliable measurement of fair value under (b) is impracticable, indirectly measure the fair value using a valuation method that uses market data to the greatest extent practicable to estimate the price in an arm's length transaction between knowledgeable, willing parties.