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PIB 4.9.3 Guidance

1. For any asset, E should be equal to the fair value of that asset presented in the balance sheet except that:
a. for any asset held at cost, E, should be equal to the cost of the asset presented in the balance sheet; and
b. for any available-for-sale (AFS) debt security or AFS loan, E, should be equal to the fair value less provision for impairment of that AFS debt security or AFS loan, adjusted by deducting any unrealised fair value gains and adding back any unrealised fair value losses on revaluation (broadly equivalent to the amortised cost of the AFS debt security or AFS loan less any provision for impairment).
2. In the case of a lease where the Authorised Firm is exposed to residual value risk (i.e. potential loss due to the fair value of the leased asset declining below the estimate of its residual value reflected on the balance sheet of the Authorised Firm at lease inception), the Authorised Firm should calculate (i) an Exposure to the lessee equivalent to the discounted lease payment stream; and (ii) an Exposure to the residual value of the leased assets equivalent to the estimate of the residual value reflected in the balance sheet of the Authorised Firm.
3. Any foreign exchange transaction or translation gain or loss from a foreign currency-denominated on-balance sheet item as well as interest earned on a fixed income instrument should be allocated to the Exposure to which it accrues.
Derived from RM111/2012 (Made 15th October 2012). [VER20/12-12]