Trade Date vs Settlement Date Accounting Explained | Ind AS 109 FVTPL Made Simple

The difference between trade date and settlement date accounting, so let me break it down for you Let’s say we're following the Trade Date accounting system Imagine on Feb 4th, we buy an asset for ₹1600; that’s our Trade Date Now, the actual settlement happens a few days later on Feb 7th That’s when we actually pay the ₹1600, and the stock finally hits our demat account But notice this—on Feb 7th, the market price has already jumped to ₹1640 And by our year-end on March 31st, it's sitting at ₹1690 Assuming this is an FVTPL (Fair Value Through Profit or Loss) asset, remember the golden rule: initially record it at fair value, and push any transaction costs straight to the P&L At every reporting date, you remeasure it at fair value and put the difference into the P&L Here’s the big catch under the 109 standard for Trade Date accounting: The Settlement Date is treated just like a Reporting Date This means on the settlement date, you must remeasure the fair value of that asset Basically, you'll pass multiple journal entries during this short window, plus a separate entry for the actual payment Treat the settlement date exactly like your year-end reporting date where you remeasure everything #Accounting #FinanceTips #TradeDate #SettlementDate #FVTPL #IndAS109 #AccountingStudent #LearnFinance #StockMarket