Marketable Securities Flashcards
Trading Securities (debt and Equity) Valuation
Trading securities = All instruments (LT, ST, Debt or Equity) that are intended to be sold in the near future.
Mark to Market. All trading securities are recorded at
Fair value and revalued each year to the latest Fair value.
Unrealized gain/losses from the valuation process is recorded on the income from continuing operations (I)DEA.
Cash Flow from operating activities or investing in non-current securities.
Available for sale (non-current asset Debt and Equity)
Mark to Market. All AFS securities are recorded at Fair value and revalued each year to the latest Fair value.
Unrealized gain/losses from the valuation process is recorded on the other comprehensive income P(U)FER.
Cash Flow from investing activities.
Realized gains and losses
Realized gains and losses are recognized when the security is sold, or when the AFS security is deemed to be impaired. all realized gains and losses are recorded in (I)DEA
Held to Maturity (Debt Securities Short Term or Long Term) Valuation process
Recorded at amortized cost. Cash Flow from investing activities.
AFS securities (multi-year gain/losses) reporting
At the end of each year, all unrealized gain/losses are moved from OCI to Accumulated OCI in RE.
So when calculating new Unrealized gain or loss, reduce total amount of OCI by what has been recognized already
AFS securities impairment
If and AFS decline in value is deemed permanent, AFS is impaired.
1- check if Market value this year is the same as last year
if Yes, no effect on AFS, move unrealized loss form Acumulated OCI to (I)DEA.
2- If Market value is different, adjust AFS to new market value, adjust OCI amount in Accumulated OCI and OCI, move the new amount in (I)DEA
AFS security impairment under IFRS
Situation:
Last year asset was impaired. This year impairment loss is recognized. Rule recognize gain directly in current year (I)DEA. no need to adjust OCI or Accumulated OCI
