CFM21630 - Accounting for corporate finance: International Financial Reporting Standards: IAS 39: measurement of financial assets: transaction costs

For those entities applying IFRS or FRS 101 with an accounting period beginning on or after 1 January 2018 refer to IFRS 9 for the recognition and measurement of financial instruments at CFM 21800+.

Where a financial asset is accounted for at FVTPL, transaction costs are immediately recognised in profit and loss upon initial recognition of the asset.

For AFS financial assets, costs that are directly attributable to the acquisition of the asset are added to the initial fair value. When the asset is subsequently re-measured at fair value, such costs will not be included, so the costs are effectively recognised in equity in the first accounting period. Where the AFS asset has fixed or determinable payments, and does not have an indefinite life, the costs are amortised to profit and loss account using the effective interest method. If the asset has an indefinite life and no fixed or determinable payment (for example, ordinary shares), the transaction costs are recycled to profit and loss account on de-recognition or impairment of the asset.

Where a financial asset is accounted for on an amortised cost basis, transaction costs are included in the calculation of amortised cost using the effective interest method.

Anticipated disposal costs are not included in the measurement of the financial instrument.