Regular way purchases and sales

Learning objectives

• Distinguish trade date accounting from settlement date accounting for a regular way purchase or sale, and their effects between the two dates.L2
• Calculate, from the data of a case, the amounts relating to regular way purchases and sales.L2
• Record the journal entries for regular way purchases and sales and measure their effect on the financial position, profit or loss and other comprehensive income.L2

Normative references

• IFRS 9 §3.1.2Regular way purchase or sale of a financial asset (delivery within the time frame established by regulation or convention in the marketplace): the entity applies trade date accounting or settlement date accounting; the paragraph applies only to purchases and sales of financial assets, not to other transactions (for example, the settlement of a receivable by electronic transfer).

Original summaries of the paragraphs (reference register), never a quotation of the standard.

2 questions

• On 28 December, Tau SA enters into a regular way purchase of bonds whose fair value at the trade date is {fair_value_trade}. Settlement and delivery take place on 3 January, when the fair value of the bonds is {fair_value_settlement}. Calculate the change in fair value between the trade date and the settlement date. The accounting treatment of this change is not asked.L2
• On 28 December, Orion SA enters into a regular way purchase of bonds at the agreed price of {purchase_price}; settlement and delivery take place on 3 January. Orion applies trade date accounting. Case assumption: the agreed price is the fair value at the trade date. Record the entry of 28 December.L2