IFRS 9 CATEGORIES

Question 1

Financial instruments recognized?

Answer 1

• At amortized cost
• At fair value through OCI:
• Debt instruments
• Equity instruments
• At fair value through P/L

Question 2

Financial liabilities recognized?

Answer 2

• At amortized cost OR,

- At fair value through P/L ( ONLY if held for trading/ irrevocable decision to designate FL at FV through P/L )

Question 3

Initial recognition?

Answer 3

Only recognize when entity becomes party to contractual terms of instrument.
Classify in categories.
Categories determine accounting treatment

Question 4

Accounting treatment for FL?

Answer 4

• At amortized cost ( initially recognized at FV minus capitalized transaction costs)
• FV through P/L ( initially recognized at FV + transaction costs not capitalized but expensed in SCI(P/L))

Question 5

Accounting treatment for FL ?

Answer 5

• Subsequent amortized cost = expense interest in SCI at the effective interest rate
• Subsequent FV = Changes in FV- through P/L

Question 6

What is amortized cost?

Answer 6

The gross carrying amount of a financial asset - impairment losses

Question 7

The gross carrying amount is therefore?

Answer 7

• amount recognized initially
• minus payments (capital/ nominal repayments and coupon interest)
• plus interest recognized at the effective interest rate.