CFM16125 – Accounting for financial instruments: IAS 32 and IAS 39: held to maturity (HTM) investments
Held to maturity investments
Held to maturity investments (‘HTM’) are non-derivative financial assets with fixed or determinable payments and fixed maturity that an entity has the positive intention and ability to hold to maturity, other than:
- those that the entity upon initial recognition designates as at fair value through profit or loss (FVTPL);
- those that the entity designates as available-for-sale (AFS); and
- those that meet the definition of loans and receivables (L&R).
Held-to-maturity investments are likely, in practice, to be a
restricted class since the decision to classify as HTM indicates
the investor is indifferent to future profit opportunities. For
example, a company might hold gilts or corporate bonds as a
long-term investment, but would be prepared to sell them if it
needed cash to finance a future expansion of the business. The
company could not classify the assets as HTM – it cannot
demonstrate the necessary positive intent and ability to hold them
to maturity.
Equity shares in a company do not have a "maturity date", so
they cannot be HTM investments.
HTM assets are stated at amortised cost, using the effective
interest method (
CFM16025).
