Settlement Date Accounting & Fair Value Adjustment | Year-End Profit Adjustment | Ind AS 109 | Final

Settlement Date Accounting & Year-End Fair Value Adjustment | Ind AS 109 Suppose a financial asset is purchased on 29 March for ₹1,600, the market value becomes ₹1,630 on 31 March, and settlement happens on 4 April when the value reaches ₹1,690. A common question arises: ❓ If settlement date accounting says the asset is recorded only on the settlement date, what happens to the ₹30 gain that existed on the balance sheet date? Ind AS provides a logical solution. ✅ The asset is still recognized on the settlement date. ✅ However, the gain existing on the reporting date cannot be ignored. ✅ Therefore, on 31 March, a Fair Value Adjustment Account is used to recognize the ₹30 gain in P&L without recording the asset itself. This ensures that: • Financial statements reflect economic reality. • Year-end profits are not understated. • Gains are recognized in the correct accounting period. • One financial year does not unfairly absorb profits belonging to another year. Understanding the logic behind the standard is far more important than memorizing the journal entries. #IndAS109 #FinancialInstruments #SettlementDateAccounting #TradeDateAccounting #FairValue #AccountingStandards #CAStudents #CAInter #CAFinal #CharteredAccountant #AccountingEducation #FinanceLearning #PFRS #FinancialReporting #Audit #CorporateAccounting #CommerceStudents #AccountingConcepts #CAClasses #SAGC