Home › CA Final › financialreporting › expectedcreditloss › An entity reclassifies bonds from FVOCI to AMORT…
An entity reclassifies bonds from FVOCI to AMORTISED COST. Fair value at reclassification = ₹90,000; ₹10,000 OCI loss had been accumulated up to that date. Under Ind AS 109, the post-reclassification carrying amount of the bond is:
A₹1,00,000 — fair value ₹90,000 PLUS the ₹10,000 OCI loss reversed against the asset; the asset is measured AS IF it had always been at amortised cost
B₹80,000 — fair value MINUS the OCI loss to avoid double-counting
C₹90,000 — fair value, with the OCI loss left untouched in equity
D₹90,000 — the fair value at reclassification date, with the OCI loss expensed in P&L
Answer & Solution
Correct answer: A. ₹1,00,000 — fair value ₹90,000 PLUS the ₹10,000 OCI loss reversed against the asset; the asset is measured AS IF it had always been at amortised cost
Para 5.6.5 + B5.6.1 — FVOCI → AC reclassification: re-measure at FV (₹90,000) AND adjust the cumulative OCI gain/loss against the asset, so the AC carrying amount equals what it would have been had the asset always been at amortised cost (₹1,00,000). This adjustment goes through OCI (not P&L) — it's NOT a reclassification adjustment. EIR and ECL measurement are NOT reset by the reclassification.
Related questions
Under Ind AS 109, the MAXIMUM PERIOD over which the entity measures expected credit lossesAn entity's portfolio of trade receivables has varied customer profiles (some wholesale, sUnder Ind AS 109, when measuring ECL for trade receivables using a PROVISION MATRIX (e.g.,An entity reclassifies bonds from FVOCI to FVTPL. Fair value at reclassification = ₹90,000Under Ind AS 109, ECL is measured in a way that reflects:Under Ind AS 109, evidence that a financial asset is CREDIT-IMPAIRED (Stage 3) includes ALEntity A holds a 10-year amortising loan of ₹10 lakh. Initial 12-month PoD = 0.5%; LGD = 2Entity A has trade receivables of ₹30 crore with no significant financing component. Lifet