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Under Ind AS 109, when an entity uses SETTLEMENT DATE accounting for a regular way purchase of an FVTPL financial asset, between trade date and settlement date:
AFair value changes are recognised in equity (separate reserve)
BNo fair value changes are recognised before settlement date
CFair value changes are deferred and recognised on settlement date
DFair value changes on the asset TO BE RECEIVED are recognised in profit or loss
Answer & Solution
Correct answer: D. Fair value changes on the asset TO BE RECEIVED are recognised in profit or loss
Under settlement-date accounting for an FVTPL asset, the buyer treats the asset-to-be-received as if already classified — recording FV changes between trade and settlement dates in P&L. For amortised cost: no FV recognition. For FVOCI: through OCI. The buyer's choice of accounting method (trade-date vs settlement-date) must be applied CONSISTENTLY for all purchases/sales of assets in the same classification.
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