InvestorQ : What are FVTPL and FVTOCI in a Stock market analysis?
rhea Babu made post

What are FVTPL and FVTOCI in a Stock market analysis?

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NISHA Nayak answered.
2 months ago

Financial Assets and Financial Liabilities is same because if we go to FVTPL route then increase in income or expenditure will affect Profit and loss which hit the reserve and surplus section in Balance sheet. If we go from FVTOCI route then there is one reserve created by the name OCI.

So position in both the situation is same. However, there is a difference. Because in FVTPL, there is regular income and any change in Market value at balance sheet date will directly go to P/L. Condition to measure FVTPL is there should be a regular income in subsequent periods. For example, equity shares, derivatives etc.

In FVTOCI there is an intention not to hold till maturity and such instruments generate interest income as well as other income like Cap Gain on sale & Instrument. They are also redeemed at a said price on a said date. For example, debenture etc

Here Ind AS restricts transfer of such income to P&L account so they create a reserve called OCI and transfer in it. Such instruments are measured at FVTOCI.