'Sweep Issue': Reclassification of Financial Instruments Under IAS 39 – Whether to eliminate differences with US GAAP

Date recorded:

Reclassification of Financial Instruments Under IAS 39 - Whether to eliminate differences with US GAAP

The staff raised an issue in respect of the transition rules of the October 2008 Amendment to IAS 39. IAS 39.103G states that 'any reclassification of a financial asset made in periods beginning on or after 1 November 2008 shall take effect only from the date when the reclassification is made'. In some countries entities will not be able to adopt this amendment until is has been approved by local law and in some cases this will be later than 1 November 2008. The staff raised the question whether, after 1 November 2008, such entities should be able to apply some form of retrospective reclassification linked to endorsement by local law.

The Board did not agree with this approach. The Board hopes that local jurisdictions will move quickly to endorse this amendment. Entities should decide prior to 1 November 2008 whether or not they intend to reclassify, subject to the requirements of local law, and calculate what the impact would be. Where endorsement occurs at a later date, it would not be acceptable for entities to postpone making a decision with respect to this amendment and subsequently adopt it retrospectively.

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