FVTOCI: Difference between revisions

Revision as of 10:39, 18 August 2016

Financial reporting.

Fair Value Through the statement of Other Comprehensive Income.

FVTOCI describes an accounting treatment for changes in the fair values of derivative instruments.

Under FVTOCI, changes in fair value are not reported as part of profit or loss (earnings) for the period.

Instead they are reported as part of 'other comprehensive income'.

The consequence of FVTOCI treatment is to avoid volatility in reported earnings.

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 Fair Value Through the statement of Other Comprehensive Income.
-Changes in fair value are ''not'' reported through the statement of profit or loss.
+FVTOCI describes an accounting treatment for changes in the fair values of derivative instruments.
-Instead through the statement of other comprehensive income.
+Under FVTOCI, changes in fair value are ''not'' reported as part of profit or loss (earnings) for the period.
+Instead they are reported as part of 'other comprehensive income'.
-In practice, the statement of profit or loss and the statement of other comprehensive income may be presented as a single combined statement.
-However, in any event the FVTOCI item will not appear in the statement of profit or loss part.
+The consequence of FVTOCI treatment is to avoid volatility in reported earnings.