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Financial assets at fair value through profit or loss Fair value
Available-for-sale financial assets Fair value
Investments in unquoted equity instruments that cannot be reliably
measured
Cost
Held-to-maturity investments Amortized cost
Loans and receivables Amortized cost
Financial liabilities at fair value through profit or loss Fair value
Financial liabilities at amortized cost Amortized cost
Impairment
sheet or loss
• All changes in fair value
• Interest income
• Dividend income
• Realized gains and losses
• Impairment losses
•
Foreign currency gains and losses (for monetary
items)
• Interest income
• Dividend income
• Realized gains and losses
• Impairment losses
• Dividend income
• Realized gains and losses
• Impairment losses
• Foreign currency gains and losses
• Interest income
• Realized gains and losses
• Impairment losses
• Foreign currency gains and losses
• Interest income
• All changes in fair value
• Interest expense
• Realized gains and losses
• Foreign currency gains and losses
• Interest expense
IAS 39 requires an entity to assess at each reporting date whether there is any objective evidence that a financial asset or group of financial assets is impaired.
Objective evidence that a financial asset or group of financial assets is impaired includes observable data about these loss events:
1. Significant financial difficulty of the issuer or obligor.
2. A breach of contract, such as a default or delinquency in interest or principal payments.
3. A troubled debt restructuring.
4. It becomes probable that the borrower will enter bankruptcy or other financial reorganization.
5. The disappearance of an active market for that financial asset because of financial difficulties.
6. Observable data indicating that there is a measurable decrease in the estimated future cash flows from a group of financial assets since the initial recognition of
those assets, although the decrease cannot yet be identified with the individual financial assets in the group (i.e., a loss that is incurred but not yet reported).
Such data may include changes in unemployment rates or property prices that affect borrowers in a group.
For investments in equity instruments that are classified as available for sale, a significant or prolonged decline in the fair value below its cost is also objective
evidence of impairment.
PRACTICAL INSIGHT