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Journal Entry — Financial Instruments — Boards Plan to Redeliberate Classification and Measurement, IASB Tentatively Defers IFRS 9

Published on: Jul 25, 2013

At their joint board meeting this week, the FASB and IASB outlined a plan for redeliberating their proposals related to the classification and measurement of financial instruments.1 At a separate meeting, the IASB tentatively decided to (1) indefinitely defer the mandatory effective date of IFRS 92 and (2) accelerate final amendments to IFRS 9 related to the presentation of changes in the fair value of financial liabilities attributable to an entity’s “own credit.”


The FASB and IASB staffs described their plan to redeliberate the following topics during future joint meetings:

Topics to Be Redeliberated

Planned Meeting Date

Contractual cash flows characteristics assessment


Objective of the amortized cost measurement

The “SPPI condition”3

Definitions of “principal” and “interest”

Application of the SPPI condition to features such as contingent, prepayment, and de minimis features

Business model assessment


Whether to retain three classification and measurement categories

How to articulate the business model objectives

Application guidance

Fair value option

Fourth quarter

Related issues

Fourth quarter

The boards will separately deliberate other components of their respective proposals. That is, the IASB expects to redeliberate only those matters related to the limited amendments it proposed to IFRS 9, which may permit it to complete redeliberations more quickly than the FASB. The IASB staff believes that the IASB can complete redeliberations by the end of 2013. The FASB will separately redeliberate other aspects of its more comprehensive proposals and currently expects to issue a final ASU in the first quarter of 2014.4

IASB’s Tentative Vote on Certain Aspects of IFRS 9

At a separate meeting, the IASB tentatively voted to eliminate IFRS 9’s current mandatory effective date of January 1, 2015, and will not specify a new mandatory effective date at this time. Instead, the Board plans to set an effective date when other phases of its project to replace IAS 39 are complete (i.e., when it completes its projects to (1) amend the guidance in IFRS 9 related to classification and measurement and (2) finalize guidance on the impairment of financial assets).

The IASB also tentatively decided to finalize amendments to IFRS 9 related to the presentation of changes in the fair value attributable to a liability’s credit risk (or “own credit”) for financial liabilities designated at fair value through profit or loss under the fair value option. These amendments would require an entity to present such fair value changes in other comprehensive income. The IASB will make these amendments concurrently with forthcoming amendments related to hedge accounting. In addition, entities will be permitted to early adopt the presentation guidance on own credit without adopting other requirements in IFRS 9.

Editor’s Note: In October 2012, the IASB issued a staff draft of its forthcoming guidance on hedge accounting. See Deloitte’s October 16, 2012, Heads Up for more information.


[1]    In November 2012, the IASB issued ED/2012/4, Classification and Measurement — Limited Amendments to IFRS 9. In February 2013, the FASB issued a proposed Accounting Standards Update (ASU), Recognition and Measurement of Financial Assets and Financial Liabilities. Comments on these proposals were due by March 28, 2013, and May 15, 2013, respectively. See Deloitte’s December 2012 IFRS in Focus and February 14, 2013, Heads Up for more information on the respective proposals.

[2]    IFRS 9, Financial Instruments.

[3]    The “SPPI condition” refers to the condition that must be met for a financial asset to be measured at something other than fair value through net income (FV-NI) under both the FASB’s and the IASB’s proposals. A financial asset may be measured at something other than FV-NI if the contractual terms of the instrument give rise on specified dates to cash flows that are solely payments of principal and interest (SPPI).

[4]    According  to the FASB’s current technical plan.

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