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I think this is my weak area..i dont know if i should read IFRS9 OR IAS 39..THE EXAMINER SHOULD HAVE BEEN MORE EXPLICIT IN SAYING WHAT WILL BE EXAMINABLE…PLEASE ANYBODY WITH FIN INSTRUMENT HELP AND LINK FOR QUESTION??
How do i start to solve questions on this?
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read both… you must know what is the 4 classification in IAS 39 and their treatment.
a) FVTPL – Measured at FV, G/L to SOCI
b) AFS – Measured at FV, G/L to Other Reserves, if asset is sold off, the reserves is recycled to SOCI to calc gain/loss on disposal
c) Loans & Receivables – Measured at Amortized cost (the cost is compounded based on the effective interest rate)
d) Held to Maturity – Measured at Amortized cost2 classification and measurement in IFRS 9
a) Equity Instrument- Carried at FVTPL or FVTOCI
b) Debt Instrument – Carried at FV or Amortized cost (must meet 2 conditions for amortized cost)2 conditions are:-
a) Business Model Test – No intention to sell the asset, intend to held the asset to maturity.
b) Cash Flow Characteristic Test – The amount of future net cash flow received are limited to principal + interest.
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