Credit Union Annual Report 2021 V2 - Flipbook - Page 47
THE CAYMAN ISLANDS CIVIL SERVICE ASSOCIATION (CICSA)
CO-OPERATIVE CREDIT UNION LIMITED
NOTES TO FINANCIAL STATEMENTS (continued)
July 31, 2021
2.4 Summary of accounting policies (continued)
Financial instruments: Initial recognition
Date of recognition
Financial assets and liabilities, with the exception of mortgage and personal loans and customer deposits, are initially
recognised on the settlement date, which is the date that an asset is delivered to or by the Credit Union. This includes
regular way trades: purchases or sales of financial assets that require delivery of assets within the time frame generally
established by regulation or convention in the marketplace. Loans and advances to customers are recognised when funds
are transferred to the customers’ accounts.
Initial measurement of financial instruments
The classification of financial instruments at initial recognition depends on their contractual terms and the business model
for managing the instruments. Financial instruments are initially measured at their fair value except in the case of financial
assets and financial liabilities recorded at FVPL, transaction costs are added to, or subtracted from, this amount. Trade
receivables are measured at the transaction price. When the fair value of financial instruments at initial recognition differs
from the transaction price, Credit Union accounts for the Day 1 profit or loss, as described below.
Day 1 profit or loss
When the transaction price of the instrument differs from the fair value at origination 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
From August 1, 2018, 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.
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