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FV-NI


It stands for fair value through net income; in other words, changes (gains/ losses) in an investment’s fair value (FV) will be reflected in an entity’s net income (NI). At acquisition, FV-NI investments are recognized at fair value, and later on at each reporting date, both realized and unrealized holding gains/ losses will be reported in net income. An example of items recorded at fair value through net income is derivative instruments. Items that are not recorded using this approach include debt and inventory.

FV-NI is the residual category, that is, financial instruments/ investments that do not qualify for the amortized cost and fair value through other comprehensive income (FVOCI) business model assessment will be recorded at FV-NI. For FV-NI investments, no separate impairment test is typically carried out as all changes in fair value are recognized in net income.



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Comments


  • Lakshya
    September 25, 2021 at 6:04 am

    Where does FV-NI go in the balance sheet?

    • Fincyclopedia
      September 25, 2021 at 1:18 pm

      It is an income statement item. The impact on balance sheet would be in the form of re-valuations and accumulated profits.

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