Those three terms refer to classification of financial assets (especially investments like bonds or securities) under accounting standards (such as IFRS / PSAK).
1. Held to Maturity (HTM)
Meaning:
Investments that a company intends and is able to hold until maturity date.
Characteristics:
- Usually bonds / debt securities
- Fixed maturity date
- Not meant to be sold before maturity
Accounting treatment:
Recorded at amortized cost
No impact from market price fluctuations (unless impaired)
Example:
Company buys a 5-year government bond and plans to hold it until it matures.
2. Available for Sale (AFS)
Meaning:
Investments that are not HTM and not for trading, so they can be sold if needed.
Characteristics:
- Flexible holding period
- Can be sold anytime depending on market conditions or liquidity needs
Accounting treatment:
Measured at fair value
Unrealized gains/losses → recorded in Other Comprehensive Income (OCI)
Example:
Company buys shares or bonds but may sell them if prices rise.
3. Trading (Held for Trading)
Meaning:
Investments bought specifically to make short-term profit.
Characteristics:
- Frequent buying and selling
- Short holding period
- Focus on price movements
Accounting treatment:
Measured at fair value
Gains/losses → recorded directly in profit & loss (P&L)
Example:
Company actively trades stocks daily to gain profit.
Quick Comparison
Easy Way to Remember
- HTM → “Keep until finish”
- AFS → “Keep, but maybe sell”
- Trading → “Buy & sell fast”
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