Methods for measurement of Financial Assets & Financial Liabilities - Ind AS - Indian Accounting Standards - Companies Law

Methods for measurement of Financial Assets Financial Liabilities Financial Assets are measured at :- Amortised Cost Method [ACM] Financial Assets is held with the objective of holding till maturity. i.e., Intention to collect only contractual cash flows (Interest Principal). Fair Value through other comprehensive income [FVTOCI] Financial Assets held for some specific time period and to sell it before maturity i.e., Intention to collect contractual cash flows Cash Flow from Sales of Asset. Fair Value through Profit or Loss [FVTPL] Financial Assets are held with objective of trading purpose only. i.e., Intention to collect cash flow from sale of asset only by taking benefit of market prices. Example Investment in Equity Shares of other entities Derivative Financial Assets. Equity Instruments do not have any contractual terms that give rise to cash flows that are solely payments of principal and interest. Therefore, Financial Assets (investment in Equity) can never be classified at Amortised Cost/FVTOCI. Hence, Equity Financial Assets are always classified at FVTPL. However, the entity may make an irrevocable election to carry equity instrument at fair value through OCI i.e., Entity has to follow it forever it cannot shown this investment in EQUITY Share at FVTPL again in Future.] Financial Liabilities are measured at Upon initial recognition all financial liabilities are measured at Fair Value. Subsequently, Financial Liabilities are generally measured at Amortised Cost Method (ACM) only. Note:- Only following 2 Financial Liabilities should be measured at FVTPL Derivative Financial Liability, liabilities that meet the definition of held for trading . Financial Guarantee