Debt

Investments
IFRS 9 – FINANCIAL ASSETS
BONDS
A bond is a formal unconditional promise,
made under seal, to pay a specified sum of
money at a determinable future date and to
make periodic interest payment at a stated
rate until the principal sum is paid
BONDS
PARTIES INVOLVED
1 – Borrower (Bond Issuer) DEBTOR

2- Bond Holder ( Investor/Lender)

CREDITOR

3-Underwriter/Arranger (Middleman)
FA at FV Profit or Loss
1. FA for Trading
2. Measured at FV
FV is determined based on
a. Quoted Price
b. PV of related CF using
effective interest rate
3. Transaction Cost is Expensed
4. Changes in FV reported at P/L as UG or (UL)
FA at FV Profit or Loss
FA at Amortized Cost
1. To hold the financial asset in order
to collect contractual cash flow on
specified dates

2. The contractual cash flows are

SPPI
FA at Amortized Cost
3. Measured at Initially at FV +
Transaction Cost

4. Measured Subsequently at
AMORTIZED COST
FA at Amortized Cost

Interest Income (-)

PREMIUM 1200

1000 1000

DISCOUNT 800 Interest Income (+)

 1,000 - Face Value
10% - Stated rate ,
Nominal rate , Coupon
rate
DISCOUNT- 800
EI – 12% Market Rate/ PREMIUM- 1,000
Fair Rate/ Yield Rate/ EI – 8%
Effective Interest Rate
Acq. In between Interest Dates

01/01 04/01 12/31

Date of Acquisition
FA at FV OCI
1. Collect Contractual Cash Flow that are SPPI
or Sell
2. Measured initially at FV + Transaction Cost

3. Measured Subsequently at FV with

amortization

4. SOLD : Gains/Losses reclass from OCI to P/L

FA – Debt Investment at FVOCI

PREMIUM ug
ug
ul
ul
DISCOUNT
a. Sale
b. Reclassify
DERECOGNITION :

a. Sale
b. Reclassify
RECLASSIFICATION

a. FVPL to FVOCI/FAAC
b. FVOCI to FVPL/ FAAC
c. FAAC to FVPL/FVOCI
a. FVPL to FVOCI
1. FA continues to be measured at FV
2. FV @reclass date NEW CA
3. New EI rate must be det. based on the FV @reclass date

FVOCI (FV@reclass date) xxx

FVPL (CV @reclass date) xxx
a. FVPL to FAAC
1. FA continues to be measured at FV
2. FV @reclass date NEW CA
3. Difference bet FV@reclass date and Face Amount is
Amortized using EI Method
4. New EI must be det based on FV@reclass dated

FAAC (FV@reclass date) xxx

FVPL (CV @reclass date) xxx
b. FVOCI to FVPL
1. FA continues to be measured at FV
2. FV @reclass date NEW CA
3. Cummulativ G/L prev. recognized in OCI is reclassified
from EQUITY to P/L as a reclass adjustment @reclass date
FVPL (FV@reclass date) xxx
FVOCI (CV @reclass date) xxx
UG- OCI xxx
Reclass Gain – P/L xxx
Reclass Loss – P/L xxx
UL - OCI xxx
b. FVOCI to FAAC
1. FA is Reclass at its FV @reclass date
2.Cummulative G/L prev recognized in OCI is removed from
equity and adjusted against FV of the FA @ reclass date
3. Original EI rate will be used to amortized the FA
FAAC (FV@reclass date) xxx
FVOCI (CV @reclass date) xxx
UG- OCI xxx
FAAC xxx
FAAC xxx
UL - OCI xxx
c. FAAC to FVOCI
1. FA is measured at FV @reclass date
2.Difference bet. FV @reclass date and amortized cost is
recognized at OCI
3. Original EI rate will be used to amortized the FA
FVOCI (FV@reclass date) xxx
FAAC (CV @reclass date) xxx
UG- OCI xxx
FVOCI xxx
FV OCI xxx
UL - OCI xxx
c. FAAC to FVPL
1. FA is measured at FV @reclass date
2.Difference bet. FV @reclass date and amortized cost is
recognized at P/L
FVPL xxx
Reclass Loss – P/L xxx
FAAC xxx
Reclass Gain – P/L xxx
IMPAIRMENT
- It is highly probable that the
investment may be impaired
Impairment Loss xxx
Loss Allowance xxx
Loss Allowance xxx
Gain on Impairment xxx
IMPAIRMENT
Thank You!
- JACOBINA BUDOSO J