ACCA SBR UK Syllabus C. Reporting The Financial Performance Of A Range Of Entities - Financial assets - Accounting Treatment - Notes 6 / 14
So we have these 3 categories..
| Category | Initial Measurement | Year-end Measurement | Difference goes where? |
|---|---|---|---|
| FVTPL | FV | FV | Profit and Loss |
| FVTOCI | FV | FV | OCI |
| Amortised Cost | FV | Amortised Cost | - |
Initially both are measured at FV.
Now let's look at what happens at the year-end..
FVTPL accounting treatment
Revalue to FV
Difference to I/S
FVTOCI accounting treatment
Revalue to FV
Difference to OCI
Amortised cost accounting treatment
Re-calculate using the amortised cost table
(see below)
An Example:
8% 100 receivable loan (effective rate 10% due to a premium on redemption)
Amortised Cost Table
| Opening Balance | Interest (effective rate) | (Cash Received) | Closing balance |
|---|---|---|---|
| 100 | 10 | (8) | 102 |
The interest (10) is always the effective rate and this is the figure that goes to the income statement.
The receipt (8) is always the cash received and this is not shown in the income statement - it just decreases the carrying amount
Any expected credit losses and forex gains/losses all go to I/S
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