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fair value of debt instrument fall from amortized cost of 6 to 5.3
There is a 12 month loss allowance of 0.4 million
solution
6- 5. 3 = 0.7 and financial assest will be at 5.3 in financial stamens at FV?0.7 will be in OCI
ECL will be account for separately as 0.4 ???Standard says that ECL will be recognize in OCI.
“5.5.2
An entity shall apply the impairment requirements for the recognition and measurement of a loss allowance for financial assets that are measured at fair value through other comprehensive income in accordance with paragraph 4.1.2A. However, the loss allowance shall be recognised in other comprehensive income and shall not reduce the carrying amount of the financial asset in the statement of financial position.”
I am not quite sure what you are asking.
You start by asking about an investment recognised at amortised cost and then refer to an investment valued at OCI. Which is it please?
Sir this is question “Carsoon” Part b.
initial measurement of debt instrument is at FVOCI.
Subsequently change in FV and ECL will be recognize in OCI.
Fair value change is 6-5.3=-0.7 decrease in FV
and ECL is -0.4 CU.so do we need to recognize 1.1 to OCI or decrease in Fair value include that effect. in the solution they charge 0.3 to OCI and 0.4 to profit and loss.
Any loss due to change in credit status should be charged in the profit and loss account.
The remaining loss should be charged in OCI
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