Classification and Reclassification of Assets IFRS9

All topics related to IFRS Standards.
Post Reply
sunny
Posts: 2
Joined: 31 Aug 2019, 09:45

Classification and Reclassification of Assets IFRS9

Post by sunny »

Dear Team,

My question/doubt is related to classification of assets in IFRS9.
  • Can security with the same asset class have different classification, example: can listed "IBMSTOCK" be classified as FVTPL and listed "APPLESTOCK" be classified as FVOCI for the same entity/fund? or does this classification happen at asset class level example : All equity stock for an entity would be classified as FVTPL based on model test and SPPI test of that entity ?
  • Can I classify an equity stock for this financial reporting period as FVTPL and then FVOCI for the next financial year ?
Thanks.
User avatar
Marek Muc
Site Admin
Posts: 3228
Joined: 15 Oct 2018, 17:21
Contact:

Re: Classification and Reclassification of Assets IFRS9

Post by Marek Muc »

Hi, yes you can treat these two holdings differently, but the FVOCI measurement for equity instruments is an irrevocable option at initial recognition only , see below:

https://ifrscommunity.com/knowledge-bas ... -recycling
sunny
Posts: 2
Joined: 31 Aug 2019, 09:45

Re: Classification and Reclassification of Assets IFRS9

Post by sunny »

Hi Marek,

Thanks a lot for the prompt response. So, if I understand your correctly you meant that I can treat IBMSTOCK with FVTPL and APPLESTOCK with FVOCI at the same time, can you also answer my second part of the earlier question (below)

Can I classify an equity/bond instrument for this financial reporting period as FVTPL and then FVOCI/HTM for the next financial year ?

Thanks.
User avatar
Marek Muc
Site Admin
Posts: 3228
Joined: 15 Oct 2018, 17:21
Contact:

Re: Classification and Reclassification of Assets IFRS9

Post by Marek Muc »

So, if I understand your correctly you meant that I can treat IBMSTOCK with FVTPL and APPLESTOCK with FVOCI at the same time
correct
Can I classify an equity/bond instrument for this financial reporting period as FVTPL and then FVOCI/HTM for the next financial year ?
I did answer this question :)
Marek wrote: 31 Aug 2019, 10:33 but the FVOCI measurement for equity instruments is an irrevocable option at initial recognition only
classification criteria for debt instruments are a bit different, see here:
https://ifrscommunity.com/knowledge-bas ... n-criteria
olcayhartoka
Posts: 5
Joined: 10 May 2022, 15:22

Re: Classification and Reclassification of Assets IFRS9

Post by olcayhartoka »

Hi,
Can I treat 60% of IBMSTOCK with FVTPL and the remaining 40% of the same IBMSTOCK with FVOCI?
Thanks
Leo
Posts: 908
Joined: 05 Apr 2020, 22:31

Re: Classification and Reclassification of Assets IFRS9

Post by Leo »

I don't think so
User avatar
Marek Muc
Site Admin
Posts: 3228
Joined: 15 Oct 2018, 17:21
Contact:

Re: Classification and Reclassification of Assets IFRS9

Post by Marek Muc »

Leo, which IFRS 9 paragraph forbids that?
Leo
Posts: 908
Joined: 05 Apr 2020, 22:31

Re: Classification and Reclassification of Assets IFRS9

Post by Leo »

nowhere, I just haven't seen it in practice. But you are right, it doesn't mean you cannot.
User avatar
Marek Muc
Site Admin
Posts: 3228
Joined: 15 Oct 2018, 17:21
Contact:

Re: Classification and Reclassification of Assets IFRS9

Post by Marek Muc »

I'm happy to clear that out! So please don't give advice on the basis that you haven't personally seen something ;)
User avatar
Marek Muc
Site Admin
Posts: 3228
Joined: 15 Oct 2018, 17:21
Contact:

Re: Classification and Reclassification of Assets IFRS9

Post by Marek Muc »

Under IFRS 9.B5.7.1 the FVOCI election is made 'on an instrument-by-instrument (ie share-by-share) basis'. As I read this, you are allowed to designate only some of the shares that you buy at FVOCI and have the rest classified at FVTPL - even if they are issued by the same company.
JRSB
Trusted Expert
Posts: 1309
Joined: 01 Mar 2020, 01:10
Location: UK

Re: Classification and Reclassification of Assets IFRS9

Post by JRSB »

An interesting idea, guess you'd have a pretty sizeable investment in IBM for that to be worthwhile, and to think carefully about which category you sell, if not all of it.
Post Reply