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Accounting for held-to-maturity debt financial investment under IFRS

Vol. 17, Iss. 33, SEPTEMBER 2014

Available online: 15 September 2014

Subject Heading: INTERNATIONAL AND NATIONAL STANDARDS

JEL Classification: 

Pages: 2-11

Kuz'min A.Yu. Financial University under Government of Russian Federation, Moscow, Russian Federation
a_kuzmin@rambler.ru

Importance Given that the domestic debt market continues growing in terms of transaction volume, the number of participants and varieties of financial instruments, as well as in terms of a number of related factors, such as an obligation of audit while organizing securities business in the Russian and international stock markets, I emphasize an increasing demand for reliable information disclosure in financial statements.
     Objectives First of all it concerns transactions with debt securities and necessitates a scientifically-based improvement of accounting instruments, prepared in compliance with the IFRS.
     Methods When developing accounting procedures and methodological recommendations for their application, I used various complementary methodological approaches, including a system approach in its subject-object and functional and structural aspects, as well as structural, dynamic and situational analyses, models of financial mathematics, and a tabular interpretation of informational and factual material.
     Results In the paper, I consider the accounting procedure for debt financial investments with a relatively complex irregular payments structure based on the concept of amortized cost under the effective interest method. In order to provide more complete analytical information for bond accounting, I propose to determine the cumulative amortized cost and to extract from it the net amortized cost taking into account the accrued coupon yield.
     Relevance The study is significant as it has developed application programming tools that include a procedure, models, algorithms, and recommendations. The worked-out provisions may serve as a means to solve the tasks of IFRS financial statements generation by both financial institutions like investment and finance companies, commercial banks, and non-financial firms, i.e. domestic debt market players.

Keywords: accounting, IFRS, financial instrument, bond, amortized cost, revaluation

References:

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