Subsequently, the investment is revalued to fair value at each year end, with the gain or loss being taken to the statement of profit or loss.Īlternatively, equity instruments can be classified as fair value through other comprehensive income (FVOCI) if an election is made. The default category is fair value through profit or loss (FVPL).Įquity instruments: fair value through profit or loss (FVPL)įVPL is the default treatment for equity investments where transaction costs such as broker fees are expensed and not capitalised within the initial cost of the asset. There are two options here, depending on the business model of the entity and the characteristics of the financial asset. There are two types of financial asset which we will consider in this article – investments in equity and investments in debt instruments.Įquity instruments are likely to be shares that have been purchased in a company, but not enough to give the investee significant influence (associate), control (subsidiary) or joint control (joint venture). This article provides a high-level overview of the following financial instrument topics which these standards relate to: It is therefore no surprise that ACCA candidates also find them complex.īoth of these standards are relevant when accounting for financial instruments and they are both examinable in the Financial Reporting (FR) exam. International Financial Reporting Standard (IFRS®) 9 Financial Instruments and International Accounting Standard (IAS®) 32 Financial Instruments: Presentation are complex standards, especially for users and preparers of financial statements. An introduction to professional insights.Virtual classroom support for learning partners.Becoming an ACCA Approved Learning Partner.
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