Investment assessment difficulties

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Ivane Javakhishvili Tbilisi State University Press
Issues related to applying new standard “IFRS 9 Financial Instruments” are discussed in the present article. Particularly, according to new standard equity investments initially are measured at fair value with subsequent changes in the value recognized ether in P&L or OCI. Additionally, if OCI election is made, recycling of these changes from OCI into P&L is prohibited when investment is sold. Concerns were raised by some stakeholders who stated that such prohibition could result in poor information presented regarding performance of long-term strategic investments which in turn could have detrimental effect on such investments, because investors would be discouraged to make these investments. Supporting as well as opposing arguments of mentioned concern are presented in the article. Eventually conclusion is made that current requirements regarding accounting of investments in IFRS 9 provides best possible information to the stakeholders. Thus, making changes in the standard is not required at the moment especially, when research suggests that prevalence of the issue is rather low, affecting only the small part of insurance companies and the problem particularly could be solved by the new standard in process – IFRS 17 Insurance Contracts.
1. კვატაშიძე ნ. ფინანსური აქტივების კლასიფიკაცია და შეფასება, ჟურნალი „ეკონომიკა და ბიზნესი“. 2013, № 2. 2. ფინანსური აღრიცხვის საერთაშორისო სტანდარტი 9: ფინანსური ინსტრუმენტები, 24.07.2014, გვ.103. 3. ბუღალტრული აღრიცხვის საერთაშორისო სტანდარტი 39: ფინანსური ინსტრუმენტები: აღიარება და შეფასება, 16.04.2009, გვ.: 40. 4. Conceptual Framework for Financial Reporting, March 2018, pg.21. 5. Barth, M., Gomez-Biscarri, J., Kasznik, R. & López-Espinosa, G. (2017). Bank earnings and regulatory capital management using available for sale securities. Review of Accounting Studies 1761-1792, pg. 58. 6. Sue Lloyd, IFRS 9 and Equity Investments, 23.05.2018, pg.9.
Financial Instruments; IFRS 9; Equity Investments; Recycling; Accounting of Long-term Investments; Impairment Models of Investments
III International Scientific Conference: "Challenges of Globalization in Economics and Business", Tbilisi, 2018, pp. 67-72