IFRSC Knowledge Base

Last updated: 25 May 2020 The objective of hedge accounting is to represent the effect of an entity’s risk management activities that use financial instruments to manage exposures arising from particular risks that could affect P/L or OCI (IFRS 9.6.1.1). If there were no specific requirements for hedge accounting, many risk management strategies could result … Read more

Last updated: 3 June 2020 Derecognition is the removal of a previously recognised financial liability from an entity’s statement of financial position. See also separate page on derecognition of financial assets. Derecognition resulting from modifications and restructurings of financial liabilities Overview of requirements relating to modifications and restructurings An exchange between an existing borrower and … Read more

Last updated: 19 February 2020 Derecognition is the removal of a previously recognised financial asset from an entity’s statement of financial position. In general, IFRS 9 criteria for derecognition of a financial asset aim to answer the question whether an asset has been effectively ‘sold’ and should be derecognised or whether an entity obtained a … Read more

Last updated: 8 May 2020 IFRS 9 requires recognition of impairment losses on a forward-looking basis, which means that impairment loss is recognised before the occurrence of any credit event. These impairment losses are referred to as expected credit losses (‘ECL’). In general, impairment losses are recognised on receivables, loan commitments and financial guarantee contracts … Read more

Last updated: 27 May 2020 Amortised cost is the amount at which some financial assets or liabilities are measured and consists of: initial recognition amount, subsequent recognition of interest income/expense using the effective interest method, repayments and credit losses. Let’s start with the two essential definitions set out in Appendix A to IFRS 9: Effective … Read more

Last updated: 27 May 2020 Subsequent measurement of financial assets and financial liabilities depends on their classification. The table below summarises the subsequent measurement for each category and more discussion follows: Classification and measurement of financial assets under IFRS 9 Fair value measurements are covered in IFRS 13. Initial measurement is covered on a separate … Read more

Last updated: 1 March 2020 Derivatives Definition of a derivative instrument in IFRS 9 The distinction between a derivative and non-derivative financial instrument is an important one because derivatives (with certain exceptions) are carried at fair value with changes impacting P/L. A derivative is defined in IFRS 9 (Appendix A) as a financial instrument or … Read more

Last updated: 17 February 2020 Classification of financial assets Categories of financial assets under IFRS 9 IFRS 9 classifies financial assets into categories as presented in the table below (IFRS 9.4.1.1). Measurement is discussed on a separate page. Classification and measurement of financial assets under IFRS 9 A classification of financial assets is made on … Read more

Last updated: 7 April 2020 IFRS 9 establishes principles for the financial reporting of financial assets and financial liabilities. All entities and all financial instruments are in the scope of IFRS 9 with certain exceptions listed in paragraph IFRS 9.2.1. General rule for initial recognition of financial instruments As a general rule, an entity recognises … Read more