Impairment of held to maturity investments

 IAS-39 prescribes as one of the indicators of impairment as "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 these assets . The above clause may be considered to reflect the  the decraese in interest rate as a factor leading to impairment.

Any further ideas?

Well a decrease in current interest rate will result in a lower fair value as compared to carrying value and is truly ann indicator of impairment. However, in practical sense I personally feel that there is no impairment reason being, at the maturity I will get the original contracted interest rate and not the market rate.

So on the said maturity date i will  gain more interest compared to market interest which doesnt indicate any impairment at my end.

Please think and share ur thoughts.

Thanks

If it is meant not to affect the future cash flows then the very impairment is questionable and it can well be argued from your point of view.

Dear Friends,

To chip-in on the query, i would say that Fixed income earning investments that are desinated as held for sale can be impaired only if there is a credit risk. Change in prevailaing market interest rate does not impact the accountig of it. Since it is a financial asset, the fair value considering the current markt rate has to be worked out and disclosed in notes as per IFRS 7.

Had it been classified FVTPL, the change in fair value due to on account of both, default risk + interest risk, would have been accounted in books of accounts.

Regards,