ipsas 29—financial instruments: recognition and measurement - IFAC

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Balances December 29, 20X2 FINANCIAL INSTRUMENTS: RECOGNITION AND MEASUREMENT Trade Date Accounting Held-to-maturity investments carried at amortized cost 1183 Available-for-sale assets remeasured to fair value with changes in net assets/equity Assets at fair value through surplus or deficit remeasured to fair value with changes in surplus or deficit Receivable 1,010 1,010 1,010 Financial asset – – – Equity (fair value adjustment) Accumulated surplus or deficit (through surplus or deficit) December 31, 20X2 – – – 10 10 10 Receivable 1,010 1,010 1,010 Financial asset – – – Net assets/equity (fair value adjustment) Accumulated surplus or deficit (through surplus or deficit) January 4, 20X3 Net assets/equity (fair value adjustment) Accumulated surplus or deficit (through surplus or deficit) – – – 10 10 10 – – – 10 10 10 D.2.3 Settlement Date Accounting: Exchange of Non-Cash Financial Assets If an entity recognizes sales of financial assets using settlement date accounting, would a change in the fair value of a financial asset to be received in exchange for the non-cash financial asset that is sold be recognized in accordance with IPSAS 29.66? It depends. Any change in the fair value of the financial asset to be received would be accounted for under IPSAS 29.66 if the entity applies settlement date accounting for that category of financial assets. However, if the entity classifies the financial asset to be received in a category for which it applies trade date accounting, the asset IPSAS 29 IMPLEMENTATION GUIDANCE PUBLIC SECTOR
FINANCIAL INSTRUMENTS: RECOGNITION AND MEASUREMENT to be received is recognized on the trade date as described in IPSAS 29.AG70. In that case, the entity recognizes a liability of an amount equal to the carrying amount of the financial asset to be delivered on settlement date. To illustrate: on December 29, 20X2 (trade date) Entity A enters into a contract to sell Note Receivable A, which is carried at amortized cost, in exchange for Bond B, which will be classified as held for trading and measured at fair value. Both assets have a fair value of CU1,010 on December, 29, while the amortized cost of Note Receivable A is CU1,000. Entity A uses settlement date accounting for loans and receivables and trade date accounting for assets held for trading. On December 31, 20X2 (financial year-end), the fair value of Note Receivable A is CU1,012 and the fair value of Bond B is CU1,009. On January, 4 20X3, the fair value of Note Receivable A is CU1,013 and the fair value of Bond B is CU1,007. The following entries are made: December 29, 20X2 Dr Bond B CU1,010 Cr Payable CU1,010 December 31, 20X2 Dr Trading loss CU1 Cr Bond B CU1 January 4, 20X3 Dr Payable CU1,010 Dr Trading loss CU2 Cr Note Receivable A CU1,000 Cr Bond B CU2 Cr Realization gain CU10 Section E: Measurement E.1 Initial Measurement of Financial Assets and Financial Liabilities E.1.1 Initial Measurement: Transaction Costs Transaction costs should be included in the initial measurement of financial assets and financial liabilities other than those at fair value through surplus or deficit. How should this requirement be applied in practice? For financial assets, incremental costs that are directly attributable to the acquisition of the asset, for example fees and commissions, are added to the amount originally recognized. For financial liabilities, directly related costs of issuing debt are deducted from the amount of debt originally recognized. For financial instruments that are measured at fair value through surplus or deficit, transaction costs are not added to the fair value measurement at initial recognition. IPSAS 29 IMPLEMENTATION GUIDANCE 1184
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IPSAS 29—FINANCIAL INSTRUMENTS: R
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FINANCIAL INSTRUMENTS: RECOGNITION
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Introduction FINANCIAL INSTRUMENTS:
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ipsas 29—financial instruments: recognition and measurement - IFAC

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