Four Categories of Financial Assets

Loans and Receivables Financial assets through Available for Sale Held to Maturity Nonmarketable equity
profit or loss (FVTPL) Securities Securities securities
a) Held for trading
b) Designated as FVTPL
Characteristics 1. The loans and 1. It is acquired 1. Debt securities 1. The securities have 1. Investments in
receivables have fixed principally for the that are not fixed or equity
or determinable purpose of selling or classified as held to determinable instruments that
payments. repurchasing it in the maturity or loans payments. are not quoted in
2. They may or may not near term. and receivables. 2. They must have a an active market
have a fixed maturity 2. On initial recognition, it 2. Debt and equity fixed maturity. and whose fair
or term. is part of a portfolio of securities that are 3. They are quoted in value cannot be
3. They are not quoted identified financial not classified as an active market. reliably measured
in active market, assets that are trading. 4. The holder has and
meaning not traded in managed together and demonstrated a 2. derivatives that
the securities market. for which there is positive intention are linked to and
4. The holder can evidence of a recent and ability to hold must be settled by
recover substantially actual pattern of short- them to maturity. delivery of such
all of its investments term profit taking. unquoted equity
unless there has been 3. It is a derivative, instruments.
a credit deterioration. except for a derivative
5. The holder does not that is a financial
have a demonstrated guarantee contract or a
positive intention and designated and an
ability to hold them to effective hedging
maturity. instrument.
Non - derivative Derivative or non- Non - derivative Non - derivative Non – derivative or
derivative derivative
Active market Not quoted Quoted Quoted Quoted Not quoted
Classification in the Current or noncurrent Always Current Current or noncurrent Noncurrent except Noncurrent
statement of depending on intention currently maturing
financial position (if silent noncurrent) portion in case of serial
bonds
Type of securities Debt securities Debt or Equity securities Debt or Equity securities Only Debt securities Equity securities
Initial recognition FV + Transaction Cost Fair value FV + Transaction Cost FV + Transaction Cost FV + Transaction Cost
Subsequent Amortized cost using the Fair value Fair value or cost (for Amortized cost using Cost regardless of FV
measurement effective interest method equity securities that the effective interest
are not quoted) method
Changes in FV N/A (unless it is an Profit or loss Other Comprehensive N/A N/A
indication of impairment) Income, net of tax
Impairment Loss Profit or loss N/A (since it is already Profit or loss Profit or loss Profit or loss
carried at fair value)
Reversal Profit or loss with limit Not Applicable Debt securities – P/L Profit or loss with limit No reversal
with limit
 Equity Securities – OCI
Gain/Loss on Sale Net Selling Price – Net Selling Price – Carrying Net Selling Price – Net Selling Price – Net Selling Price –
(Deduct accrued Carrying Value (Amortized Value (Fair Value previous Acquisition Cost or Carrying Carrying Value
interest if sold cost) measurement date) Impaired value Value(Amortized cost)
between interest
dates or dividends if
the share is sold
between date of
declaration and date
of record)