Investments, classified the way IFRS 9 asks

Under IFRS 9 how you measure an investment depends on what it is and why you hold it: and each classification behaves differently at every reporting date. Most small-business software has one bucket called "investments".

Five treatments, not one

• Fair value through profit or loss: revaluations go to income.
• Fair value through OCI: revaluations go to a reserve, and stay there.
• Amortised cost: bonds and sukuk on the effective-interest method.
• Equity method: an associate, carried at your share of its results.
• Investment property under IAS 40.

Bonds get their schedule

A bond bought away from par carries a discount or a premium that accretes into interest income over its life. Elvira solves the effective interest rate, then shows every period: opening carrying amount, interest income, coupon, amortisation and closing: landing exactly on par at maturity.

And the events that happen to holdings

• Purchases, disposals and part-disposals.
• Revaluation to fair value at a date you choose.
• Dividends, bond interest, bonus shares and share splits.
• Impairment, where the classification calls for it.