Amendments to IAS 32 and IAS 39, Financial Instruments

Date recorded:

The Board discussed whether to include additional guidance to clarify what contracts to buy or sell non-financial items are within the scope of IAS 32 and 39. The Board agreed to include the following wording in paragraph 6 and 7.

There are various ways in which a contract to buy or sell a non-financial item can be settled net in cash or another financial instrument or by exchanging financial instruments. These include:

a. when the terms of the contract permit either party to settle it net in cash or another financial instrument;

b. when the non-financial item that is the subject of the contract is readily convertible to cash.

A written option to buy or sell a non-financial item that can be settled in cash or another financial instrument, or by exchanging financial instruments, in accordance with paragraph 6(a) or 6(d) is within the scope of this Standard. Such a contract cannot be entered into for the purpose of making or taking delivery of the non-financial item in accordance with the entity's expected purchase, sale or usage requirements, because the option writer does not have the ability to require delivery.

Correction list for hyphenation

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