Page 79 - F2 Integrated Workbook STUDENT 2019

Financial instruments

Subsequent treatment of financial assets: DEBT

Three categories exist for debt financial assets:

– Amortised cost

– Fair value through other comprehensive income (FVOCI)

– Fair value through profit or loss (FVPL)

Entities can designate and measure financial assets as amortised cost or fair value
through other comprehensive income depending upon the outcome of the business
model and contractual cash flow tests.

Debt

– Business – Business Not designated
as other
model is to model is to
intend to categories/fails
intend to hold AND tests (e.g.
hold until sell intends to sell)
maturity

– Contractual – Contractual
cash flow
cash flow test
test

Fair value Fair value

through other through profit
comprehensive or loss (FVPL)

income (FVOCI)  Revalue to

 Revalue to fair value
fair value
 Gains or

Amortised cost  Gains or losses to
losses to OCI P/L

71