Classification of derivative instruments
How are derivative instruments classified?
Derivative instruments are a subset of financial instruments. In the definition of financial asset, we have the following phrase, viz, “to exchange financial assets or financial liabilities with another entity under conditions that are potentially favourable to the entity” and in the definition of financial liability “to exchange financial assets or financial liabilities with another entity under conditions that are potentially unfavourable to the entity”. This means that depending upon the net present value (fair value) of the derivative instrument it will either be shown as a financial asset or as a financial liability. As per Ind AS 109, all derivatives are deemed to be held for trading. The fair value changes of the derivative instruments are always recorded in the profit and loss account. Hence, all derivative instruments irrespective of whether it represents a financial asset or a financial liability are classified as FVTPL only. An entity cannot elect to present the changes in fair value of derivatives in OCI as the derivative instruments fall within the definition of assets held for trading as per Ind AS 109.
Effective Rate of Interest – EIR
Are RBI circulars relevant for ECL computation as per Ind AS 109?
What is a Financial instrument?
Is there a choice to designate as FVTPL?
What are treasury shares and how are these presented
Contract to deal in non-financial item
Can a corporate entity still follow settlement date accounting?
Gains and losses on assets measured at FVOCI
Separately accounting for an embedded derivative
Derecognition of a financial asset
Foreign currency risk in a firm commitment as a fair value hedge
Treatment of transaction costs
Derecognise financial assets/financial liabilities retrospectively
Modification of contractual cash flows
Own use exemption as per the Accounting Standard
Difference between amortised cost & held-to-maturity
Accounting treatment for FVOCI Instruments
What is the concept of effective interest method?
First-time adoption while classifying a financial instrument
SPPI test & business model objective test
Current standards for financial instruments as per AS?
Contract is settled through the entity’s own equity instrument
Financial asset categorised as FVOCI
What is an embedded derivative?
Impairment model for different categories of financial assets
Ind ASs relating to financial instruments
FVOCI (equity instruments) and FVOCI (debt instruments)
Reclassification of a financial asset
Debt instrument measured at FVOCI
Change in contractual cash flows
Loss allowance as per Ind AS 109
Ind AS for financial instruments replica of IFRS?
Contractual cash flows & effective interest rate
Long-term financial liability classified as FVTPL
Credit adjusted effective interest rate
Effective rate of interest during the first-time adoption
Consequence of not de-recognising an asset after the sale
Designation of contracts deal a non-financial item on first time adoption
Recognition of financial instruments on first-time adoption
Gains and losses on a financial instrument
Gains and losses from liabilities designated as FVTPL
Measurement categories for financial assets
Difference between time value of money and modified time value of money
