Under IFRS classification of financial assets falls into three categories: amortized cost, fair value through other comprehensive income (FVOCI), and fair value through profit or loss (FVPL). The classification is based on the entity’s business model for managing the financial assets and the contractual cash flow characteristics.
However under GAAP classification of financial assets into three categories: held-to-maturity (measured at amortized cost), available-for-sale (fair value with unrealized gains and losses reported in other comprehensive income), and trading (fair value with gains and losses reported in net income).
I am unable to comprehend the difference of above IFRS and GAAP approaches to recognise a financial asset.
Could you please help me to understand the difference of above 2 approaches, possibly with some example? And, how the difference, if any, impact financial reporting on a Company's reported revenue or Asset/Liab or various Financial ratios like FFO/Debt/EBITDA etc?
Any guidance and/or online resources to understand the difference and impact would be very helpful.
Thanks for your time.
However under GAAP classification of financial assets into three categories: held-to-maturity (measured at amortized cost), available-for-sale (fair value with unrealized gains and losses reported in other comprehensive income), and trading (fair value with gains and losses reported in net income).
I am unable to comprehend the difference of above IFRS and GAAP approaches to recognise a financial asset.
Could you please help me to understand the difference of above 2 approaches, possibly with some example? And, how the difference, if any, impact financial reporting on a Company's reported revenue or Asset/Liab or various Financial ratios like FFO/Debt/EBITDA etc?
Any guidance and/or online resources to understand the difference and impact would be very helpful.
Thanks for your time.
