Scribd Logo
Upload

Welcome to Scribd!

  • Financial Assets at Fair Value

    Uploaded by

    gab camon
    14 views3 pages
    This document discusses the classification and measurement of financial assets under PFRS 9. It defines financial assets and provides examples, such as cash, accounts receivable, investments in shares, bonds, and funds. Equity securities represent ownership interests, while debt securities represent creditor relationships. Financial assets are initially measured at fair value plus transaction costs, except for those classified as fair value through profit or loss (FVPL), which are measured at fair value. Subsequent measurement depends on the classification as FVPL, fair value through other comprehensive income (FVOCI), or amortized cost based on the business model. Equity investments are generally measured at fair value through profit or loss or fair value through other comprehensive income

    Original Description:

    Copyright

    © © All Rights Reserved

    Available Formats

    PDF, TXT or read online from Scribd

    Did you find this document useful?

    Is this content inappropriate?

    Report this Document
    This document discusses the classification and measurement of financial assets under PFRS 9. It defines financial assets and provides examples, such as cash, accounts receivable, investments in shares, bonds, and funds. Equity securities represent ownership interests, while debt securities represent creditor relationships. Financial assets are initially measured at fair value plus transaction costs, except for those classified as fair value through profit or loss (FVPL), which are measured at fair value. Subsequent measurement depends on the classification as FVPL, fair value through other comprehensive income (FVOCI), or amortized cost based on the business model. Equity investments are generally measured at fair value through profit or loss or fair value through other comprehensive income

    Copyright:

    © All Rights Reserved
    Download as PDF, TXT or read online from Scribd
    Flag for inappropriate content
    14 views3 pages

    Financial Assets at Fair Value

    Uploaded by

    gab camon
    This document discusses the classification and measurement of financial assets under PFRS 9. It defines financial assets and provides examples, such as cash, accounts receivable, investments in shares, bonds, and funds. Equity securities represent ownership interests, while debt securities represent creditor relationships. Financial assets are initially measured at fair value plus transaction costs, except for those classified as fair value through profit or loss (FVPL), which are measured at fair value. Subsequent measurement depends on the classification as FVPL, fair value through other comprehensive income (FVOCI), or amortized cost based on the business model. Equity investments are generally measured at fair value through profit or loss or fair value through other comprehensive income

    Copyright:

    © All Rights Reserved
    Download as PDF, TXT or read online from Scribd
    Flag for inappropriate content
    of 3

    Financial Assets at Fair Value

    Monday, July 6, 2020 11:24 PM

    Investments
    IASB - assets held for accretion of wealth trough distribution such as interest, royalties dividends and
    rentals for capital appreciation.
    Assets not directly identified with operation activities
    Auxiliary relationship to revenue

    Purpose of investments
    a. For accretion of wealth - royalties, dividends, interest, rentals
    b. For capital appreciation - land, diamonds, golds
    c. Ownership control - subsidiaries, associates
    d. Meeting business requirement -sinking fund, PS redemption fund, plant expansion fund
    e. Protection - life insurance, cash surrender

    Examples of investments
    a. Trading securities or FA@FVPL
    b. FA@FVOCI
    c. Investment in non-trading equity security
    d. Investment in bonds at amortized cost
    e. Investment in associate
    f. Investment in subsidiary
    g. Investment in property
    h. Investment in fund
    i. Investment in joint venture

    Statement classification
    Current - realizable within 1 year
    Noncurrent or long term - not realizable within 1 year

    Financial Asset
    a. Cash
    b. Contractual right to receive cash or another financial asse - A/R
    c. Contractual right to exchange financial instrument under favorable terms - options, warrants
    d. Equity of another entity - shares

    Examples:
    1. Cash or currency
    2. Deposit of cash
    3. A/R, N/R, L/R
    4. Option
    5. Investment in shares

    Not Financial assets


    1. Gold
    2. Intangible asset - patent
    3. Physical asset - inventory, PPE
    4. Prepaid expense
    5. Leased assets

    Classification of Financial Asset - financial instrument


    PFRS 9

    Equity Investment Page 1


    PFRS 9
    1. FA @ FVPL - Equity and Debt Securities
    2. FA @ FVOCI - Equity and Debt Securities
    3. FA @ Amortized cost - Debt Securities

    Classification depends on business model


    1. Hold investment to realize fair value changes
    2. Hold investment to collect contractual cash flow - amortized
    3. Hold investment to collect contractual cash flow and sell investment

    Equity Security
    Ownership interest
    Ownership shares (OS, PS), rights, warrants, options
    Shareholders - owners
    Share - ownership interest or right
    Share Certificate - evidence
    Right - earnings, election of directors, subscribe add. Shares, shares in liquidation
    Do not include
    a. Redeemable PS
    b. Treasury shares
    c. Convertible debt

    Debt Security
    Creditor relationship
    Maturity date and maturity value
    Examples:
    a. Corporate bonds
    b. BSP Treasury bills
    c. Government securities
    d. Commercial papers
    e. PS with mandatory redemption date or redeemable

    Financial Asset Initial measurement


    Non trading - Fair Value + Transaction Cost
    Trading of FA @ FVPL - Fair Value
    • Transaction cost - fees, commissions, levies, transfer tax and duties
    • Do not include - premiums, discounts, financing, internal administrative or holding cost

    Subsequent measurement:
    a. FA @ FVPL
    b. FA @ FVOCI
    c. FA @ Amortized cost

    F A @ FVPL
    1. Trading securities
    2. Quoted equity instrument
    3. FA that are irrevocably designated - investment in bonds and debt security even if satisfy the AC
    and FA@FVOCI
    4. All debt instrument not classified as AC or FA @FVOCI - default

    • Financial asset held for trading


    - Debt and Equity purchased for purpose of selling
    - Part of portfolio managed together evidenced by recent pattern of profit taking
    - Derivative except financial guarantee contract, hedging instrument

    Equity Investment Page 2


    - Derivative except financial guarantee contract, hedging instrument
    - Current Assets

    Equity investment at OCI

    Equity Investment Page 3

    You might also like