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Hi Sir
Question 1
as per para 5.5.2 of IFRS 9
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.
my question is how to record credit loss for financial Asset which we recognize at FVTOCI? will the entry be
Dr OCI
CR loss allowancebut we don’t show it net
when its is sold
Dr loss allowance
Cr /Dr with gain or loss on disposal
Dr cashQuestion 2
my second question is we should recognize loss upto amount of lifetime credit losses at max. if later remaining amount is not recovered we don’t create further loss allowance for that but instead we credit receivables and debit profit and loss.
Q1 When you book the credit loss : Dr P&L Cr OCI. On disposal follow normal rules depending whether it’s shares or debt.
Q2 Correct – it’s just a big bad debt.
if we debit P & L and credit OCI it will stay in OCI forever. In sale of equity interest do we record gain or loss on disposal in profit and loss and same with debt instrument?
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