Name : Abdul Kadir Al Jailani

Student Number : C1C017065

Prior to the ASU 2016 and IFRS 9, the financial assets were classified into four groups by their
subsequent measurement types under both IAS 39 and USGAAP, namely:

1. Trading or designated at fair value through PL (FVPL),

2. Available for sale (AFS),
3. Held to maturity (HTM),
4. Loan and receivables (Loans).

Please note that there are more than one accounting standards by FASB for the financial assets,
such as ASC 310 for Loan Receivables , ASC 320 for Debt securities, and ASC 815 for Derivatives
and Hedge, etc.

The legal form together with the intent and ability will still be determining conditions under the
current and future USGAAP for classification, while the IFRS 9 categorization effective since 2018
will be based on the new criteria, namely financial instruments’ contractual cash flows and the
business model.

PSAK 71 is consistent with IFRS 9 in all significant respects. IFRS 9 supersedes IAS 39 and IFRIC 9.
IFRS 9 is effective from 1 January 2018 and early adoption is permitted. In July 2017, DSAK - IAI
has issued PSAK 71 to be effective in 1 January 2020. Early adoption is permitted.
Latest updates in the measurement and impairment loss of financial instruments will widen the
gaps between these two systems after the effectiveness of the new versions.

That is, many common features in classification and impairment loss now shared by current
effective standards, IAS 39 and relevant USGAAP prior to the ASU 2016-1 and ASU 2016-13 will be
removed in the future due to the changes in both sides, where the IASB’s update is more drastic.

Entities with global operation or international funding requirements should check the reporting
requirements, both domestic and overseas in different regions. Especially, whether it is subject to
both IFRS and USGAAP or not. For some reporting entities with complicated structures, the
solution varies from single choice of USGAAP or IFRS, or reconciliation from one to the other, or
parallel run of both standards.