OPTION TO DESIGNATE A FINANCIAL ASSET AT FAIR VALUE THROUGH PROFIT OR LOSS

An entity may, at initial recognition, designate a financial asset as measured at fair value through profit or loss if doing so eliminates or significantly reduces a measurement or recognition inconsistency (sometimes referred to as an “accounting mismatch”) that would otherwise arise from measuring assets or liabilities or recognizing the gains and losses on them on different bases. (IFRS 9 Para 4.5)

Impact of IFRS 9 on available-for-sale category for debt instruments

By virtue of the amendments made through IFRS 9 to financial instruments, available-for-sale as a category will cease to exist with effect from 1st Jan 2013 or earlier if the entity so decides to adopt IFRS 9 earlier. If the investments in fixed income securities are made within a business model having an objective to hold such investments to collect interest receipts then the instruments should be classified as subsequently measured at amortized cost. Otherwise such investments should be classified as subsequently measured at fair value.

FX translation on available-for-sale securities

Fixed income securities are classified as monetary items as there exists a right to receive a fixed or determinable amount of unit of currency from the issuer on maturity of the fixed income securities. However, this is only where the securities are held-to-maturity, in which case the securities will be classified as held-to-maturity. Hence, fixed income securities ...

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