INTACC 2019_DEBT INVESTMENTS_02
RECLASSIFICATION OF DEBT INVESTMENTS
Debt investments are recorded following the business model of the company (CF SPPI, for trading, or both). Accordingly,
in some instances, the company may change its business model. Consequently, the company must now record the debt
investment following the new business model.
Reclassification shall take effect in the following reporting period. For example, business model changed in 2019, the
reclassification will begin on January 1, 2020.
Guide for reclassification:
From
To
Amortized Cost
FVTPL
Amortized Cost
FVTOCI
FVTPL
FVTPL
FVTOCI
AC
FVTOCI
AC
FVTOCI
FVTPL
Adjustment
Difference between FV and AC is
taken to profit or loss
Difference between FV and AC is
taken to OCI; effective rate is not
adjusted
Calculate an effective rate
FV is the initial AC; calculate an
effective rate
Get the carrying value without the
change in fair value.
Transfer cumulative unrealized gains
and losses in OCI to PL
IMPAIRMENT OF DEBT INVESTMENTS
Compare carrying amount with the present value of estimated future cash flows discounted at the financial asset’s
original effective interest rate at initial recognition. Difference is impairment loss. This is similar to notes restructuring.
Page 1 of 1