Accounting Practices and Disclosure on Financial Statements for Investment in Debt and Equity Securities of Thai Commercial Banks Listed on the Stock Exchange of Thailand

Abstract

Thai Accounting Standards 105 on Accounting for Debt and Equity Securities has defined
accounting practices and disclosure for investment in debt and equity securities as investment in
financial asset. For the initial recognition, an entity should classify trading securities as a temporary
investment (less than 1 year); debt securities held-to maturity as a long-term investment (over
1 year). An available for sale security or a general investment can be classified as either
a short-term investment (less than 1 year) or a long-term investment (over 1 year). In addition,
an entity should present temporary investments as current assets, and long-term investments as
non-current assets in the Statement of Financial Position. After the initial recognition, an entity
should measure the trading securities and available for sale securities at fair value. Gain or loss
from changes in fair value of temporary investments should be recognized in profit and loss for the
period when it occurs. Gain or loss from changes in fair value of long-term investments should be
recognized in owner’s equity. General investments should be presented at cost, net of allowance
for impairment (if any), Debt securities held-to maturity should be presented at amortized cost,
net of allowance for impairment (if any). The Accounting Standards indicate that the investment
in marketable securities should be presented at fair value because the stock price announced
in public is the best evidence. However, the investment in non-marketable securities classified

as general investment should be measured at cost because the fair value cannot be determined
easily. This article is the study of accounting practices and disclosure on financial statements
for investment in debt and equity securities of 11 listed companies in the banking sector. The results
in the year 2015 indicated that 10 banks invested in the trading investments, 11 banks invested
in the available for sale investments, held-to-maturity debt securities, and general investments,
Moreover, all of the 11 banks have the accounting practices according to the Thai Accounting
Standards 105.