Home › CA Final › financialreporting › expectedcreditloss › An entity reclassifies bonds from FVOCI to FVTPL…
An entity reclassifies bonds from FVOCI to FVTPL. Fair value at reclassification = ₹90,000; ₹10,000 OCI loss has accumulated. Under Ind AS 109, the OCI loss is:
ASpread over the remaining contractual life of the bond as an EIR adjustment
BLeft untouched in OCI — never recycled to P&L on subsequent disposal
CReclassified from OCI to PROFIT OR LOSS as a reclassification adjustment at the date of reclassification
DReversed against the carrying amount, so the bond is measured at ₹1,00,000
Answer & Solution
Correct answer: C. Reclassified from OCI to PROFIT OR LOSS as a reclassification adjustment at the date of reclassification
FVOCI → FVTPL reclassification: the asset continues at fair value, but the cumulative OCI gain/loss is RECYCLED to P&L as a reclassification adjustment. Subsequent FV movements then go through P&L. (Contrast: for FVOCI EQUITY (irrevocable election), OCI is NEVER recycled — equity FVOCI follows a different rule. The current question is about DEBT FVOCI.)
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 AMORTISED COST. Fair value at reclassification Under 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