Impairment of Investments held in AFS

[ahsanalpha]

Kindly confirm the treatment of impairment of Bond held as AFS

Before Impairment (asset is a Bond)
Asset at Fair Value 90
Asset Face Value 100
Fair value deficit (in equity) 10

When impaired entry is made
________________________________________
Impairment expense (In PnL) DR 10
Deficit on fair value (In equity) Cr 10
________________________________________

While the asset is still at 90 and there is no Provisioning liability, if further provisioning is not required.

kindly confirm

[kamranACA]

Your entry is correct.

Regards

[hmmm]

when cost assume is 100 and f.v is 90 then deficit will be i profit & loss

Impairment Loss 10 dr.
Investment 10 cr.

ithink so it will not be adjusted in equity.

[blue_oceans79]

(10-17-2011 12:46 PM)ahsanalpha Wrote:  Kindly confirm the treatment of impairment of Bond held as AFS

Before Impairment (asset is a Bond)
Asset at Fair Value 90
Asset Face Value 100
Fair value deficit (in equity) 10

When impaired entry is made
________________________________________
Impairment expense (In PnL) DR 10
Deficit on fair value (In equity) Cr 10
________________________________________

While the asset is still at 90 and there is no Provisioning liability, if further provisioning is not required.

kindly confirm

Entry you have mentioned is incorrect. AFS impairment shall be taken to pl straight away.