I have come across a problem relating to IAS 32/39 (IFRS 7) on the carrying amount computation of a 5-yrs-bonds portfolio.
This is a debt instrument classified under financial liabilities categories of Fair Value through Profit or Loss.
In order to determine the recoverable amount i.e. the Present Value. I discount the estimated cash flows [(Principal + accrued interests) x AER x (months to maturity/12] at the bonds' original coupon rate. ( we have a portfolio of bonds with different coupon rates and months to maturity but they are all 5-yrs-bonds)
Here comes to the question: Can I use an industry average annual coupon rate of a 5-yrs-bond for the whole portfolio of my 5-yrs-bonds (over 20 some) ? because if each individual coupon rate is used, I would lose track of my "months to maturity data" and make the spreadsheet unbelievably complex, and It would be even harder to spot any errors.
My worry is that the auditor may pick this up and say that it is a best practice to use each rates. Even the standards didn't specify this explicitly.
I am asking here that are there any supporting claims ( from the standards or those reputable sources) to allow my way of calculation ? i also believe, using average coupon rate does not constitute to materiality issues here. Correct ? Or Have i got it wrong completely ?
Many thanks for your prompt responses !