Category (IFRS)

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According to IAS 39 , financial instruments must be assigned to a category for accounting . The category regulates how changes in value are to be treated in terms of income. These rules are particularly important when accounting for credit institutions .  


Loans & Receivables (L&R)

In German: loans and receivables . This category categorizes financial instruments that are not traded on public markets. These financial instruments are valued at amortized cost . Discounts are accrued in accordance with the effective interest rate and shown in the interest result. Impairment tests due to changes in the debtor's creditworthiness are determined and written off.

Typical examples are bank loans. If a bank gives a loan with a term of 10 years at an interest rate of 5% and the market interest rates rise to such an extent that the bank now charges 6% for the same loan (interest rate change), the bank would only be able to sell the loan at a discount . This theoretical loss is not shown in the profit and loss account. The assumption is that the bank will typically hold this loan to maturity (100%) and therefore the loss will never be realized.  

Held to Maturity (HtM)

In German: Hold until the due date . These are securities that the company intends to hold until maturity. Treatment is analogous to L&R. For the procedure for an early sale see: Tainting  

Held for Trading (HfT)

In German: Held for commercial purposes . These are securities and derivatives that are not held permanently in the portfolio, but are bought and sold for trading purposes; they are to be valued daily at their market value . If this does not exist, a fair value is to be applied. Changes in value are shown directly in the income statement as profit / loss. The pro rata premium / discount is not shown as interest income, but also as trading income. For other financial instruments, the category Fair Value at Inception (FVaI) is used with the same function. The generic term for both is at fair value through profit or loss .  

Available for Sale (AfS)

In German: held for sale. This includes financial instruments that are not intended for short-term trading, but which are intended to be sold. These are treated in the same way as HfT. The difference to HfT is that the changes in value are not shown directly in the income statement, but in the revaluation reserve (in IFRS 9 : Other Comprehensive Income (OCI) ).

Other Liabilities (OL)

In German: other liabilities. Similar to L&R, these are valued at amortized cost.  


These categories are also used in US GAAP "Generally Accepted Accounting Principles" . Available for Sale (AfS) is one of three classifications recognized in US GAAP , alongside Held for Trading (HfT) and Held to Maturity (HtM) .