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Financial instruments — Limited reconsideration of IFRS 9

Background

At the November 2011 IASB meeting, the staff recommended that the Board consider making improvements to IFRS 9 Financial Instruments, in respect of the classification and measurement model for financial assets.

In particular, they were asked to consider the interaction of the classification and measurement model for financial assets with the insurance contracts project and were asked to consider a new measurement category of fair value through other comprehensive income applicable for debt instruments.

In addition they were asked to consider application issues identified by entities who have, or are in the process of, early adopting IFRS 9 with a focus on additional guidance to help preparers in the application of the business model assessment and the assessment of the contractual cash flow characteristics of financial assets.

 

Current status of the project

On 24 July 2014, the IASB published the finalised version of IFRS 9 Financial Instruments which incorporates limited amendments to the classification and measurement requirements for financial assets (as well as a new expected loss impairment model).

The Standard introduces a new FVTOCI classification for debt instruments where both of the following conditions are met:

  • the financial asset is held within a business model whose objective is achieved by both collecting contractual cash flows and selling financial assets; and
  • the contractual terms of the financial asset give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding.

The Standard also introduces guidance on applying the business model assessment and the contractual cash flow characteristics assessment.

 

Project milestones

DateDevelopmentComments
November 2011 Project tentatively added to the agenda
28 November 2012 ED/2012/4 Classification and Measurement: Limited Amendments to IFRS 9 (proposed amendments to IFRS 9 (2010)) published
Comment deadline 28 March 2013
24 July 2014 IASB issues IFRS 9 Financial Instruments IFRS 9 (2014) was issued as a complete standard including the requirements previously issued and the additional amendments to introduce a new expected loss impairment model and limited changes to the classification and measurement requirements for financial assets.

This amendment completes the IASB’s financial instruments project and the Standard is effective for reporting periods beginning on or after 1 January 2018 with early adoption permitted (subject to local endorsement requirements).

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