Summary of Accounting for Investments
Basis of Classification
Business Model: Hold
to Collect
Cash flow
characteristics: SPPI
(solely payments of
principal and interest)
Business Model: Hold
to Collect and Sell
Cash flow
characteristics: SPPI
(solely payments of
principal and interest)
Business Model: Not
defined
Cash flow
characteristics: Not
defined
Exceptions:
Investment in equity
securities
Eliminates or significantly
reduces ‘accounting
mismatch’
Classification of Composition Statement of Initial Measurement Subsequent Statement of
investment Financial Position measurement Comprehensive
Income
- Interest income
computed using
Amortized Cost Debt securities Current or Non- Fair value plus Amortized cost less effective interest
current transaction cost impairment allowance method recognized in
P/L
- Impairment
gains/losses recognized
in P/L
- Changes in fair value
recognized in OCI
Current or Non- Fair value plus Fair value (with recycling)
FVOCI (mandatory) Debt securities current transaction cost - Interest income
computed using the
effective interest
method recognized in
P/L
- Impairment
gains/losses recognized
in P/L (with offset to
OCI)
Current Asset Fair value Fair Value Changes in fair value
FVPL Debt or equity recognized in P/L
securities
Changes in fair value
FVOCI (election) Equity securities Current or Non- Fair value plus Fair Value recognized in OCI
current assets transaction cost (without recycling)
FVPL (designated)