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I am confused regarding the classification of financial instruments- my understanding is that a financial asset can be either an equity or a debt instrument. it was my understanding that equity instruments can be measured at;
1. FVTPL
2. FVTOCI
and debt instruments can be measured at;
1. FVTPL
2. FVTOCI
3. amortised cost
i am however reading the SBR article regarding FI and it states that FVTOCI can be only used on equity instruments .could you please confirm which understanding is correct?
thanks and regards
AM
Hi,
No, this is incorrect as it can be classified as FVTOCI if there is an intention to sell. It only is held at FVTPL if under the fair value option.
Thanks
Hi, firstly, I am a bit lost here on why there are so many measrument options. What’s the benefit? Can you please explain what are the implications of particular measurment options? E.g. tax implication, etc.
Secondly, does the amortisation cost option mean that gains and losses on debentures measurent go through P&L?
Thank you very much.
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