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Financial instruments — Classification and measurement

Background

This project forms part of the IASB's comprehensive project on financial instruments. As part of the comprehensive project, the IASB decided to address classification and measurement of financial assets and financial liabilities first because they form the foundation of a standard on reporting financial instruments. Moreover, many of the concerns about IAS 39 Financial Instruments: Recognition and Measurement expressed during the financial crisis related to its classification and measurement requirements.

The consideration of the classification and measurement of financial assets focused on simplifying and rationalising the categories of financial assets under IAS 39. A significant issue in the classification and measurement of financial liabilities is the treatment of an entity's 'own credit risk'.

 

Current status of the project

The IASB issued IFRS 9 Financial Instruments on 12 November 2009, covering the recognition and measurement of financial assets. IFRS 9 was reissued on 28 October 2010 to incorporate requirements for the recognition and measurement of financial liabilities (and also incorporate requirements for derecognition of both financial assets and financial liabilities). IFRS 9 is effective for annual periods beginning 1 July 2013.

In July 2011, the IASB added an additional project to consider the effective date of IFRS 9, deferring it mandatory application to 1 July 2015.

In November 2011, the IASB agreed to undertake a limited review of IFRS 9, to potentially consider the interaction of the requirements with the insurance contract project, and to reconsider the requirements of IFRS 9 in light of developments in the FASB's project on financial instruments.

 

Project milestones

DateDevelopmentComments
18 June 2009 Discussion Paper DP/2009/2 Credit Risk in Liability Measurement published Comment deadline 1 September 2009
14 July 2009 Staff paper accompanying Discussion Paper DP/2009/2 Credit Risk in Liability Measurement published Comment deadline 1 September 2009
14 July 2009 Exposure Draft ED/2009/7 Financial Instruments: Classification and Measurement published Comment deadline 14 September 2009
12 November 2009 IFRS 9 Financial Instruments issued, covering classification and measurement of financial assets Effective for annual periods beginning 1 July 2013*
11 May 2010 Exposure Draft ED/2010/4 Fair Value Option for Financial Liabilities published Comment deadline 16 July 2010
28 October 2010 IFRS 9 Financial Instruments reissued, incorporating accounting for financial liabilities (and derecognition) Effective for annual periods beginning 1 July 2013*

* Subsequently amended to 1 January 2015.

Related Discussions

  • Financial instruments: Classification and measurement

  • Sep 26, 2012

  • The Board discussed the following topics in relation to its proposed limited amendments to the classification and measurement requirements in IFRS 9: (1) relief to accelerate application of ‘own credit’ requirements; (2) two additional transition issues related to the limited amendments to IFRS 9 and one related issue for impairment; and (3) due process considerations.

  • Technical plan

  • Nov 17, 2010

  • The IASB and FASB briefly discussed the timing of each of the Memorandum of Understanding (MOU) joint projects in preparation for the intended issue of an updated technical plan. Three projects were discussed in detail: financial instruments, discontinued operations and the Conceptual Framework.

  • Classification and measurement of financial liabilities — Fair value option for financial liabilities

  • Oct 05, 2010

  • The IASB: (1) reconsidered their tentative decision to not permit recycling of amounts within OCI, even when a liability is derecognised at an amount other than the contractual amount (2) discussed the effective date and transition guidance related to fair value of financial liabilities (3) agreed to relocate to IFRS 9 relevant parts of Implementation Guidance of IAS 39 related to requirements relocated from IAS 39.

  • Fair value option for financial liabilities

  • Jul 23, 2010

  • The staff presented the IASB with the analysis of comment letters on the Exposure draft ED/2010/4 'Fair Value Option for Financial Liabilities'. The Board did neither discuss the issues in detail nor did it take any decisions during this meeting.

  • Financial Instruments: Classification and Measurement

  • Mar 19, 2010

  • The Board discussed (1) the fair value option, (2) cost exception for derivatives, (3) the reclassification of financial liabilities between amortised cost and fair value and (4) transition requirements.

  • Replacement of IAS 39: Classification and Measurement

  • Feb 17, 2010

  • The IASB agreed that financial liabilities held to pay contractual cash flows that have pain vanilla contractual cash flow characteristics should be measured at amortized costs unless the fair value option is elected.

  • Financial Instruments: Classification and Measurement

  • Dec 18, 2009

  • The staff presented a summary of the outreach activities and opinions expressed by constituents on classification and measurement of financial liabilities with the emphasis on the own-credit-risk issue.

  • Financial Instruments

  • Jun 19, 2009

  • The Board considered staff proposals designed to address Board members' concerns that disclosures would be required for early adopters to increase comparability with entities that do not adopt early.

All Related