FINANCIAL ASSETS @FVPL @FVOCI @Amortized cost

Examples: a) Financial assets held

for trading
b) On initial debt securities & debt securities
recognition, there is a equity securities
pattern of short-term
profit.
c) Irrevocable
designated on initial
recognition as at FVPL
d) Other investment
not in FVOCI or FV
@amortized cost

debt securities &

equity securities
Classification Current asset Noncurrent asset
a) Equity investment a) Equity investment:
- If not held for trading
and was measured at
FVOCI by IRREVOCABLE
ELECTION
b) Debt investment b) Debt investment: b) Debt investment:
- Held to collect Debt investment @ It is at amortized cost if
contractual cash flows FVOCI if BOTH it meets both of the ff:
by IRREVOCABLE conditions are met: - Held to collect
DESIGNATION or FAIR - Held to collect contractual cash flows
VALUE OPTION to be contractual cash flows at specified date; and
measured at FVPL. and selling or trading - The collected
Requirements to be
the financial asset; and contractual cash flows
classified as such:
- Held to collect - The contractual cash are SOLELY principal
contractual cash flows flows are solely and interest payments.
and to sell or trade the payments of principal
financial asset by and interest.
IRREVOCABLE
DESIGNATION or FAIR Interest income is then
VALUE OPTION to recognized and is
measure them at FVPL. measured using
effective interest
method as in
amortized cost
measurement.
1) Initial recognition @ FV @ FV @ FV
+ transaction costs + transaction costs
directly attributable to directly attributable to
the acquisition of the the acquisition of the
financial asset financial asset
Treatment of no transaction cost at Transaction cost shall
transaction costs initial recognition be CAPITALIZED AS
directly attributable to COST of the financial
the acquisition of instead, the asset.
financial asset transaction cost in
HELD FOR TRADING
SECURITIES or financial
assets at FVPL are
EXPENSED OUTRIGHT.
(still recognized but
expensed outright)
Ex.:
Trading securities xx
Commission exp xx
Cash xx
Transaction cost at Not deducted Not deducted
disposal
2) Subsequent FVPL FVOCI Amortized cost
measurement
Subsequent changes in The subsequent For equity investment Unrealized gains and
fair value / gain or loss measurement of held no held for trading: unrealized losses are
(is reclassification for trading securities The amount in OCI NOT RECOGNIZED
allowed?) are ALWAYS INCLUDED (subsequent changes in because such
IN PROFIT OR LOSS as fair value) CANNOT be investments are not
other income or other reclassified to profit or measured at FV.
expense in income loss under any
statement. circumstances. Gains and losses from
derecognition, sale,
Offsetting of The cumulative through amortization
unrealized gains and unrealized gain or loss process, impairment,
unrealized losses are (Ex.: unrealized gain or and reclassification, are
PERMITTED by the loss for 2021 + 2022 + recognized in PROFIT
standard. 2023) should be OR LOSS
presented in statement
of changes in equity.
(This is not on disposal,
because if on disposal,
the cumulative amount
will be transferred to
retained earnings.)
3) Impairment Not assessed for a) Equity investment @ (there is no equity
impairment FVOCI: investment in financial
Not assessed for assets @ amortized
impairment cost)
a) Debt investment:
b) Debt investment @ The expected credit
FVOCI: loss is recognized.
 The expected credit
loss is recognized. *Credit loss – PV of all
cash shortfalls.
*Credit loss – PV of all *Expected credit loss –
cash shortfalls. the estimate of credit
*Expected credit loss – loss over the life of the
the estimate of credit financial instrument.
loss over the life of the
financial instrument.
The entity shall measure the loss allowance for a
financial instrument at an amount equal to the
lifetime expected credit loss if credit risk on that
financial asset has increased significantly since
initial recognition.

Impairment loss = Carrying Amount – PV of

estimated future cash flows discounted at original
effective rate
a) Equity investment: a) Equity investment:
The difference between - Gain or loss on
the Carrying Amount disposal of equity
and the Consideration investment measured
Received (Gain or Loss at FVOCI is recognized
on sale of trading directly in RETAINED
securities) shall be EARNINGS.
recognized in Profit or Ex.:
Loss. Cash xx
Ex.: RE xx
Cash xx Financial asset xx
Loss on trading sec xx - AND the cumulative
Trading sec (@CA) gain or loss previously
4) Derecognition
xx recognized in OCI is
The CA of the trading also transferred to
securities was at RETAINE EARNINGS.
market value on Dec
31, 2021 in IA 1 by
Valix pp. 443.
b) Debt investment No debt investments in
The cumulative gain or financial assets @
loss recognized in OCI amortized cost.
SHOULD BE
RECLASSIFIED TO
PROFIT OR LOSS in
derecognition.