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Hope you’re doing good..
Could you please tell me the difference between the following?
Financial Assets are initially measured at fair value.
Financial assets : fair value through PnL category, initially recognised at fair value with transaction cost taken to PnL
Fair value through OCI category: initial recognition at Cost
Fair value + transaction costAmortised cost : par value – discount + transaction cost
Hi
According to Tom Clendon’s article in Student Accountant, August 2012 ………
All financial assets are fair value at initial measurement (at amortized cost and at FVTOCI include transaction costs within the initial measurement)
FV through PL – at fair value but there’s no mention of transaction costs so take to P and L. Subsequent gains and losses go through Statement of Income
FV through OCI – initial measurement is at fair value (not cost) plus transaction costs. Subsequent gains and losses go through reserves (and OCI)
At amortized cos – measurement is at fair value plus transaction costs and subsequently at amortized cost (need to satisfy business model and cash flow test)
What further explanation do you want?
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