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HMRC internal manual

Corporate Finance Manual

Accounting for corporate finance: International Financial Reporting Standards: IAS 39: classification of financial liabilities

IAS 39 recognises two classifications of financial liabilities:

  • Financial liabilities at fair value through profit or loss (FVTPL); and,
  • Others

As with financial assets, the first category is divided into two sub-categories:

  • Designated - a financial liability that is designated by the company as a liability at fair value through profit or loss upon initial recognition; and
  • Held for trading (HFT) - a financial liability classified as held for trading, such as an obligation for securities borrowed in a short sale, which have to be returned in the future.

Guidance on the designation of financial liabilities as FVTPL is at CFM21540.

Financial liabilities that are designated as hedged items are subject to the hedge accounting requirements - see CFM27000.