Embedded derivatives with a financial liability host contract

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The embedded derivative is either separated from the host contract or accounted for as a derivative in line with IFRS 9 (fair value through profit or loss).

Separation criteria:

  1. Economic characteristics of the embedded derivative and host are not closely related,
  2. An identical instrument (with the same terms) would meet the definition of a derivative, and
  3. The entire (hybrid) contract is not measured at fair value through profit or loss

Host contract (separated from embedded derivative) is accounted for in line with the applicable IFRS.

IFRS Synonyms:
Embedded derivative with a financial liability host contract, Embedded derivatives within a host contract that is a financial liability, Embedded derivative within a host contract that is a financial liability, Host financial liability, Host contract financial liability,