IFRS 9 The Solely Payments of Principal and Interest Test

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Last update 01/12/2019 IFRS 9 The Solely Payments of Principal and Interest Test is a necessary condition (see IFRS 9 Classification and Measurement of Financial Instruments) for classifying loans and receivables at Amortized Cost or FVOCI.  This means that the contractual payments give rise on specified dates to cash flows that are solely payments of … Read more

IFRS 9 The Business Model Test

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Last update 16/11/2019 IFRS 9 The Business Model Test is a necessary condition (see IFRS 9 Classification and Measurement of Financial Instruments) for classifying a loan or receivable at Amortized Cost or FVOCI. The test is about whether the asset is part of a group or portfolio that is being managed within a business model … Read more

IFRS 9 Retain control of the asset

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Last update 31/10/2019 IFRS 9 Retain control of the asset IFRS 9 Retain control of the assetis part of a decision model for the derecognition of financial assets. The derecognition can be a full derecognition, a full continued recognition, a full derecognition with recognition of new assets or liabilities retained or a continued involvement. The … Read more

IFRS 9 Retain all risks and rewards

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Last update 31/10/2019 IFRS 9 Retain all risks and rewards is part of a decision model for the derecognition of financial assets. The derecognition can be a full derecognition, a full continued recognition, a full derecognition with recognition of new assets or liabilities retained or a continued involvement. The model is starting here. Derecognition of … Read more

IFRS 9 Reclassification of financial instruments

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Last update 27/10/2019 Topics hide IFRS 9 Reclassification of financial instruments Equity investments Related posts: IFRS 9 Reclassification of financial instruments For financial assets, reclassification is required between FVTPL, FVTOCI and amortised cost, if and only if the entity’s business model objective for its financial assets changes so its previous model assessment would no longer … Read more

IFRS 9 Profit participating loan

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Last update 02/12/2019 IFRS 9 Profit participating loan – Parent A advances €1m to Subsidiary B on 1 January 2018 with the following terms: 5% interest; 30% of the annual appreciation in the property value; €1m repayable in 5 years – December 2022. Classification As the loan is in a ‘hold to collect’ business model, … Read more

IFRS 9 Practical Hedge documentation template

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Last update 11/12/2019 This IFRS 9 Practical Hedge documentation template can be used as the basis for the formal documentation required by IFRS 9. However, every hedge is a specific transaction so changes should be made based on the actual situation to document. In section 9 there is room to add smaller additions and/or attachments … Read more

IFRS 9 Interest-free demand or term loan

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Last update 02/12/2019 IFRS 9 Interest-free demand or term loan or Senior bank term debt Parent A advances a €200k unsecured loan to Subsidiary B on 1 January 2018 with the following terms: 0% interest and repayable on demand; or IFRS 9 Interest-free demand or term loan 0% interest and repayable in 5 years (assume … Read more

IFRS 9 Inflation as a risk component

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Last update 27/11/2019 Inflation as a risk component – Under IAS 39, inflation cannot be designated as a hedged risk component for financial instruments, unless the inflation risk component is contractually specified. For non-financial instruments, inflation risk cannot be designated under IAS 39 as a risk component at all. Inflation as a risk component Highlight … Read more

IFRS 9 Impairment of Financial Instruments

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Last update 04/12/2019 IFRS 9 Impairment of Financial Instruments establishes a new model for recognition and measurement of impairments in loans and receivables that are measured at Amortized Cost or FVOCI—the so-called “expected credit losses” model. This ECL model is the only impairment model that applies in IFRS 9 because all other assets are classified … Read more