Held for trading v/s Designated at Fair Value

[Sanjay Sachdev]

Difference b/w “Designated at Fair Value” and Held-for-Trading ? sounds quiet similar to me…can someone have a strong basis to differentiate this ?

 

[S2000magician]

The curriculum doesn’t make any distinction between the two, except that you cannot reclassify DAFV securities.

 

[Wojtek]

Held for trading are those instruments which you actually hold for trading purposes plus derivatives.
Designated as at FV through Profit or Loss, means you take an instrument which would otherwise be classified elsewhere (eg an equity security which you don’t intend to actively trade in) and decide that you want to apply the same accounting treatment to it, as you would for held for trading instruments.

 

[S2000magician]

So, from an accounting standpoint, apart from the inability to reclassify them, they’re identical to trading securities.

 

[Sanjay Sachdev]

Cheers, Wojtek & S2000magician your’s help is greatly appreciated. This topic has been dominating me, but slowly getting there.
thankyou!

 

[S2000magician]

My pleasure.