Hi,
Can any one explain the differences between Financial assets at fair value through profit or loss (FVTPL) and Held for trading (HFT) financial assets.
I can give you a only brief understanding of IAS 39 here, probably this will answer your question, however to have good unsderstanding of concept, one should read IAS 39.
IAS 39 classifies the financial assets into four category:
FVTPL: fair value through P&L
HTM: held to maturity
L&R: Loans and receivables and
AFS: Available for sales.
A financial asset can be classified as FVTPL which is either held for trading purpose or which are designed as FVTPL to eliminate or reduce recognition and measurement inconsistence or where its performance is evaluated based on fair value in risk management policy or investment strategy of the company. Thus FVTPL is broader concepts which includes held for trading instruments.
Accounting: FVTPL instruments are always valued at fair value (initial recognition and subsequent measurement) However on subsequent measurement the changes in fair value of instruments are recorded in P&L.
Fair value through OCI is introduced in IFRS 9 which is not yet effective. FVOCI covers instrument where changes in fair value of instrument are recognised in OCI and not in P&L (e.g AFS instruments of IAS 39).
IASB has set 2018 as tentative effective date for IFRS 9.
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