Pfrs - Financial Asset at Fair Value Essay

1296 Words Oct 17th, 2015 6 Pages
Chapter 22: Financial Asset at Fair Value
International Accounting Standards Board
Investments are assets held by an entity for the accretion of wealth through distribution such as interest, royalties, dividends, and rentals, for capital appreciation or for other benefits to the investing entity such as those obtained in trading relationship s.
PAS 32, paragraph 11
Financial instrument, any contract that gives rise to a financial asset of one entity and a financial liability or equity instrument of another entity.
PFRS 9 paragraph 4.1.1
Financial assets are classified into three:
A) Financial assets at fair value through profit or loss – both include equity securities and debt securities
B) Financial assets at fair value
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Appendix A of PFRS 9 provides that a financial asset is held for trading if:
A) It is acquired principally for the purpose of selling or repurchasing it in the near term.
B) On initial recognition, it is part of a portfolio of identified financial assets that are managed together and for which there is evidence of a recent actual pattern of short-term profit taking.
C) It is a derivative , except for a derivative that is a financial guarantee contract or a designated and an effective hedging instrument.
PFRS 9 paragraph 5.7.5 provides that an entity may make an irrevocable election to present in other comprehensive income or OCI subsequent changes in fair value of an investment in equity instrument that is not held for trading.
PFRS 9 paragraph 4.1.2 provides that a financial shall be measure at amortized cost if both of the following conditions are met:
A) The business model is to hold the financial asset in order to collect contractual cash flows on specified date.
B) The contractual cash flows are solely payments of principal and interest on the principal amount outstanding.

PFRS 9 paragraph 4.1.2A provides that a financial shall be measure at fair value through other comprehensive income if both of the following conditions are met:
A) The business model is achieved both by collecting contractual cash flows and by selling the financial asset.
B) The contractual cash flows are solely payments of principal and

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