CFM21560 - Accounting for corporate finance: International Financial Reporting Standards: IAS 39: classification of financial assets: held to maturity (HTM) investments

For those entities applying IFRS or FRS 101 with an accounting period beginning on or after 1 January 2018 refer to IFRS 9 for the recognition and measurement of financial instruments at CFM 21800+.

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.

CFM21570 contains guidance on when classification of investments as HTM is restricted.

HTM assets are stated at amortised cost, using the effective interest method (CFM21170).