What is Available for Sale?
Available-for-sale (AFS) was a financial asset category under IAS 39 for assets that did not fit any other classification. Under IFRS 9 the same idea is captured by the fair value through other comprehensive income (FVOCI) classification.
How It Works
- Confirm the business model is ‘hold to collect and sell’ for debt instruments, or elect FVOCI for equity instruments.
- Measure the asset initially at fair value plus transaction costs.
- Re-measure to fair value at each reporting date and post the change to OCI.
- For debt instruments, recycle realised gains and losses to the income statement on derecognition.
- For equity instruments under FVOCI election, do not recycle to P&L.
Saudi Context
Saudi listed banks and insurers under SOCPA-adopted IFRS classify a significant portion of their investment portfolios as FVOCI. Tadawul-listed entities disclose the fair value movements in OCI in their interim and annual financials.
Example
A company holds equity worth SAR 500,000 classified as FVOCI. At year end the fair value rises to SAR 540,000. The SAR 40,000 unrealised gain is recognised in OCI and not in profit.