Under IFRS what is the accounting treatment when held for trading (HFT) investments which are classified under current assets are valued year end and thier fair value:
1)has gone up
2)has gone down
a) Plase let me know what accounting entry is to be passed in each of above scenario.
b)Which IFRS deals with above matter?
Thanks and regards,
Anil.
As per IAS 39, Held for trade investment instruments are required to be fair valued through P&L.
Please read IAS 39, All your confusion will be clear.
When you will read than read IAS 32, IAS 39 and IFRS 7 together. All this standards are deals with derivatives
Condition for Classifying a Financial Assets as HFT :
A financial asset is considered to be held for trading if the entity acquired or incurred it principally for the purpose of selling or repurchasing it in the near term or is part of a portfolio of financial assets subject to trading
Journal Entries :
At the time of initial purchase
Dr Financial assets at fair value through profit or loss 55,000
Cr Cash 55,000
When Prices gone up
Dr Financial assets at fair value through profit or loss 7,000
Cr Profit or loss 7,000
At the time of Sale
Dr Cash 62,000
Cr Financial assets at fair value through profit or loss 62,000
2nd entry will be pass on the month end.. because in the books we need to book the loss or profit as per market rate.. because financial instrument bel in market to market
Thank you.
its ok no issue
CAclubindia
