FVOCI (equity instruments) and FVOCI (debt instruments)

FVOCI (equity instruments) and FVOCI (debt instruments)

What is the difference FVOCI (equity instruments) and FVOCI (debt instruments)

Debt instruments are classified as FVOCI if and only if both the following conditions are satisfied, viz, (a) financial asset is held within the business model whose objective is achieved by both collecting directly cash flows and selling of financial assets, and (b) the contractual terms of the financial assets represents solely payments of principal and interest. However, in the case of equity shares, the entity has irrevocable election choice that can be exercised on an instrument by instrument basis to classify such instruments as FVOCI. The main difference between debt instruments classified as FVOCI and equity instruments classified as FVOCI is that in the former the classification arises on account of evaluation of the business model as well as characteristics of the contractual cash flows, whereas, in the later, an entity can exercise the option to classify an equity instrument as FVOCI by exercising the option to do so, albeit irrevocable with certain strings attached to the same.

The main difference between the two is the way in which the accumulated gains or losses from such instruments are treated. The accumulated gains or losses from debt instruments (FVOCI) are reclassified to the profit and loss account on liquidation of the financial assets, whereas, for equity, the instruments (FVOCI), the accumulated gains or losses in the OCI remains in OCI even on liquidation of such financial assets and is never recycled to the profit and loss account.

Ind AS Accounting Standards

Effective Rate of Interest – EIR

What is SPPI test?

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?

What does Interest represent?

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?

What is a hybrid contract?

First-time adoption while classifying a financial instrument

SPPI test & business model objective test

Current standards for financial instruments as per AS?

Effective interest Rate

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

Classification of derivative instruments

Contract meant for own use

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