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ACCA P2 Corporate Reporting(INT.)

公司报告（国际会计准则）

Chapter 11 Financial Instrument

ACCA Lecturer: Roy Wang

ACCA Research Institute

Copyright © ACCAspace.com ACCAspace 中国ACCA特许公认会计师教育平台 2

. 1

Financial Instrument(IAS32,IAS 39,IFRS9,IFRS7)

De-recognition 2

Impairment 3

Disclosure 4

Measurement


Initial measurement: financial assets

Financial instruments are initially measured at the

transaction price, that is the fair value of the consideration

given.

In the case of financial assets classified as measured at

amortised cost, transaction costs directly attributable to

the acquisition of the financial asset are added to this

amount.

IAS 39 Recognition and Measurement


Subsequent measurement of financial assets

Under IFRS 9, financial assets are measured subsequent to

recognition either at:

At amortised cost, using the effective interest method, or

At fair value through other comprehensive income,

At fair value through profit or loss



Example :Amortized cost

P invested $10,000 in 5% loan notes on 1st July 2014.P had

to pay transaction costs of $500. then loan notes will be

redeemed in 3 years at a premium of $1,255.The effective

interest rate is 7%.

How to do the initial and subsequent measurement for the

above loan note for P.



Example FV TO P/L

A purchased 15,000 shares at the market price of

$1.62/share on 1st March 2013.Transaction cost was

$1200.At 30th June 2014 the shares are trading at

$1.4/shares.At 30th June 2015 the shares are trading at

$1.85/share.



Example:FV TO OCI

M invested in 20,000 shares of a listed company not for

trading purpose. The shares cost $1.7 each at 1st March

2014. transaction cost of $2,000 were incurred. At 30th June

2014 their market price was $2.1/share.At 30th June 2015

their market price was $1.6/share.



Financial liability

1)Keep:Amortised cost

2)Hold for trading:FV TO P/L



Keep(not for trading):amortised cost

E.g:loan:FV-costs

Subsequent measurement: At amortized costs

Interest(effective interest):DR: p/l (interest payable)

CR:financial liability

Payment: DR:financial liability

CR:cash



Hold for trading:FV TO p/l

Initial measurement :FV + transaction cost

Subsequent measurement

Re-measured to FV at each reporting date;gain or losses

would go into P/L.

Exception:If the FV changes of the financial liability is

because of company’s credit risk changes, then the FV

changes would go into OCI with the remaining go into SOPL.



G issue a $30,000 3 year 8% redeemable bond at a discount

of 10% with issue costs of$1,000.

The bond is redeemable at a premium of $1,297.

The effective interest rate is 14%

Show the treatment for the bond over the 3 year

period.(Amortised cost)



Financial instrument de-recognition:Financial asset

An entity should derecognise a financial asset when:

(a) The contractual rights to the cash flows from the

financial asset expire, or

(b) The entity transfers the financial asset or substantially

all the risks and rewards of ownership of the financial

asset to another party.(Sold)



Derecognition :financial liability

A financial liability is derecognised when it is extinguished

– ie when the obligation specified in the contract is cancelled

or expires.

IAS 32 PRESENTATION


The carrying value of FVTOCI investment(Total) is $35,400.

During the year an investment which had originally cost

$3,000 was sold for cash proceeds of $8,000.

Its fair value as at 30thJune 2014 was $6,500.

The fair value of the remaining investments at 30thJune

2015 was measured at $36,700.

Required:

Show the accounting treatment.



Compound financial instrument

Convertible debt

Initial Measurement

DR:cash

CR: loan

CR:Equity(bf)

Subsequent measurement

Liability component is measured at amortized cost where the

effective rate would be the rate of similar non-convertible

liability.

Equity component is not remeasured.

IAS 32 compound financial instrument


Financial asset impairment

FVTPL

FVTOCI

Amortised cost


Expected credit loss


Expected credit loss model

We simply estimate the future expected loss relating to this

financial asset carried at amortized cost and discount those

losses at the original effective interest rate to give us the

impairment loss. Then we charge it to the P/L and offset

against the financial asset.



FVTPL

DR:P/L

CR:Financial asset



Amortised cost

DR:P/L

CR: Financial asset at amortised cost



On 31stDEC 2014, Hu plc bought a bond for $1m measured

at amortised cost. Coupon interest of 10% the same as

effective interest rate. Repayment is due on 31 DEC 2017(3

year bond).

On 31stDEC 2015 it was estimated that the probability of

default on the bond within the next 12 months would be

0.5%. If default happens within the 1st12 months then Hu plc

estimated that no further interest will be received and that

only 50% of the capital will be repaid on 31 DEC 2017.

Accounting treatment of the financial asset at 31 DEC

2015.



DR P/L 29

CR Financial asset at amortised cost 29



FVTOCI

Taking the impairment loss to the p/l using expected loss

model and the balancing figure would go into OCI.



DISCLOSURE

SOFP

Financial performance and position for each class financial

instrument

Any reclassification, de-recogniton, irrecoverable losses of

financial instrument, breach of loan agreements.

IFRS 7 Disclosure


SOPL

Separate disclosures for each class of financial

instrument

If financial instrument is not carried at FVTPL then

disclose interest expense on that

Disclose any impairment losses..

IFRS 7 Disclosure


Other information

FV of financial instrument:how to determine and its

value.

Accounting policy of how to treat financial instrument.

Information about the nature of financial instrument in

detail

IFRS 7 Disclosure


Risk of financial instrument

Qualitative of risks:

Risk exposure

Risk management

Any changes in risks from previous years

Quantitative of risks:

Credit risk:collateral, maximum exposure at the year end

Liquidity risk:maturity, how to manage this risk

Market risk:market price change.bad debt.interest rate

changes.

IFRS 7 Disclosure

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