Credit Union Annual Report 2022 - Flipbook - Page 49
THE CAYMAN ISLANDS CIVIL SERVICE ASSOCIATION (CICSA)
CO-OPERATIVE CREDIT UNION LIMITED
NOTES TO FINANCIAL STATEMENTS (continued)
July 31, 2022
2.4 Summary of accounting policies (continued)
Day 1 profit or loss
When the transaction price of the instrument differs from the fair value at originati on and the fair value is based on a
valuation technique using only inputs observable in market transactions, Credit Union recognises the difference between
the transaction price and fair value in net trading income. In those cases where fair value is based on models for which
some of the inputs are not observable, the difference between the transaction price and the fair value is deferred and is
only recognised in profit or loss when the inputs become observable, or when the instrument is derecognised.
Measurement categories of financial assets and liabilities
The Credit Union classifies all of its financial assets based on the business model for managing the assets and the asset ’s
contractual terms, measured at either:
•
Amortised cost
•
Fair value through other comprehensive income (FVOCI)
•
Fair value through profit or loss (FVPL)
The Credit Union classifies and measures its equity securities at FVPL as explained in summary of accounting policies.
Credit Union may designate financial instruments at FVPL, if so doing eliminates or significantly reduces measurement
or recognition.
Financial liabilities, other than loan commitments, are measured at amortised cost or at FVPL when they are held for
trading and derivative instruments or the fair value designation is applied.
Financial assets and liabilities
Debt instruments are those that contain contractual obligations to pay the instrument holder certain cash flows. Cash,
fixed deposits, mortgages and personal loans, and receivables are classified as debt instruments. The classification and
subsequent measurement of debt instruments depend on the assessment of business model and characteristics of cash
flow.
Business model assessment
The Credit Union determines its business model at the level that best refl ects how it manages groups of financial assets
to achieve its business objective:
•
The risks that affect the performance of the business model (and the financial assets held within that business
model) and, in particular, the way those risks are managed.
•
How managers of the business are compensated (for example, whether the compensation is based on the fair
value of the assets managed or on the contractual cash flows collected).
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