RECLASSIFICATION OF FINANCIAL ASSETS

IFRS 9 Financial instruments requires that when an entity changes its business model for managing financial assets, it should reclassify all affected financial assets. However, this reclassification only applies to debt instruments, as equity instruments must be classified as measured at fair value.

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FINANCIAL INSTRUMENTS: MEASUREMENT

The measurement of financial instruments can be divided into two parts, i.e. on initial recognition (how a financial asset or liability should be measured when it is first acquired or incurred) and subsequent to initial recognition (how a financial asset or liability should be measured at the reporting date).

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FINANCIAL INSTRUMENTS: CLASSIFICATION

Classification of financial assets

Under IFRS 9 Financial instruments, financial assets can be classified into four categories as follows:

• Measured at amortised cost
• Measured at fair value through profit or loss (FVTPL)

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FINANCIAL INSTRUMENTS: RECOGNITION AND DERECOGNITION

Recognition

Under IFRS 9 Financial Instruments, an entity should recognise a financial asset or liability in its statement of financial position when the entity becomes a party to the contractual provisions of the instrument, rather than when the contract is settled.

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