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IFRIC D15

References

  • IAS 39 Financial Instruments: Recognition and Measurement

History

  • IFRIC D15 Issued 31 March 2005. Click for Press Release (PDF 66k).
  • Comment Deadline 31 May 2005
  • The draft Interpretation was available publicly on the IASB's Website during the comment period.
  • IFRIC Interpretation 9 Reassessment of Embedded Derivatives issued 1 March 2006 Click for Press Release (PDF 60k)

Deloitte Letter of Comment on this Draft Interpretation

Important: IFRIC D15 resulted in the final IFRIC Interpretation 9, issued in March 2006. The information on this page reflects the IFRIC's discussions during the development of the final interpretation, including tentative decisions that were changed along the way. We have retained this page for historical purposes only.

Summary of IFRIC D15

IAS 39 Financial Instruments: Recognition and Measurement requires an entity, when it first becomes a party to a contract, to assess whether any embedded derivatives contained in the contract are required to be separated from the host contract and accounted for separately as derivatives under the standard. An example of an embedded derivative is the conversion option that is part of an investment in convertible debt.

The two questions addressed in D15, and the proposed responses, are:

  • Question: Does IAS 39 require assessment of whether an embedded derivative must be separated from the host contract only when the entity first becomes a party to the derivative contract or throughout the life of the contract?
    D15 Proposal: Make the assessment only when the entity first becomes a party to the contract. Subsequent reassessment is prohibited unless there is a change in the terms of the contract, in which case it is required.
  • Question: Should a first-time adopter of IFRSs make its assessment on the basis of the conditions that existed when the entity first became a party to the derivatives contract, or those prevailing when the entity adopts IFRSs for the first time?
    D15 Proposal: Make the assessment based on the conditions that existed when the entity first became a party to the contract.

To allow entities affected by the final interpretation enough time to change current practices, the proposed effective date for the interpretation is annual periods beginning on or after a date to be set at three months after the interpretation is finalised. Earlier application would be encouraged.

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