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Under Ind AS 109, when an entity uses TRADE DATE accounting for a regular way purchase, the buyer:
ARecognises the financial asset AND the financial liability to pay on the trade date itself; subsequent FV changes are accounted per the asset's classification (no change for amortised cost; P&L for FVTPL; OCI for FVOCI)
BRecognises the financial asset on settlement date but the liability on trade date
CRecognises both asset and liability on settlement date only; trade date has no accounting
DRecognises both on trade date but freezes the fair value until settlement
Answer & Solution
Correct answer: A. Recognises the financial asset AND the financial liability to pay on the trade date itself; subsequent FV changes are accounted per the asset's classification (no change for amortised cost; P&L for FVTPL; OCI for FVOCI)
Trade-date accounting: asset + liability (to pay) are both booked on the trade date. Between trade date and settlement date, the buyer accounts for FV changes the same way it accounts for any asset in that category — no change for amortised cost, through P&L for FVTPL, through OCI for FVOCI. The seller correspondingly derecognises on trade date and recognises any gain/loss.
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