Classification of Financial Assets IFRS 9 a concept that STATES Financial Assets are classified into Amortized Cost, Fair Value through Other Comprehensive Income, and Fair Value through Profit or Loss, EITHER as Debt Investment or Equity Investment.
Table of Contents
What is Financial Asset?
IFRS 9 DEFINES Financial Asset as any asset that is:
- Cash;
- Equity Instrument of another entity;
- Contractual Right; AND
- Contract that will or May-be settled in the entity’s own equity instrument.
3 Categories – Classification of Financial Assets IFRS 9
As per IFRS 9 ‘Financial Assets’ are CLASSIFIED either as ‘Debt Investment‘ or ‘Equity Investment‘.
| Debt Investment | Equity Investment |
|---|---|
| (a) Amortized Cost | (a) Fair Value through Other Comprehensive Income (FVOCI) |
| (b) Fair Value through Other Comprehensive Income (FVOCI) | (b) Fair Value through Profit or Loss (FVPL) |
| (c) Fair Value through Profit or Loss (FVPL) |
The Bottom Line
Classification of Financial Assets IFRS 9 a concept that STATES Financial Assets are CLASSIFIED either as ‘Debt Investment‘ or ‘Equity Investment‘. The objective of IFRS 9 is to ESTABLISH principles for the financial reporting of Financial Assets and Financial Liabilities that will present relevant and valuable information to users of financial statements.
Chartered Accountant (Institute of Chartered Accountants of Pakistan)
Bachelor of Accounting Honours (Asia e University, Malaysia)