IFRS 9 Financial Instruments and IAS 39 Financial Instruments: Recognition and Measurement - Fees and costs included in the ‘10 per cent’ test for the purpose of derecognition- Comment letter analysis and finalisation of agenda decision - Agenda paper 9

Date recorded:


The Interpretations Committee received a request to clarify which fees and costs should be included in the ’10 per cent’ test for the purpose of derecognition of a financial liability.  The Interpretations Committee concluded that IFRS 9 and IAS 39 sufficiently distinguishes fees paid or received between the parties to the contract from other costs. The Interpretations Committee noted that in carrying out the 10 per cent test, an entity includes only fees paid or received between the lender and the borrower or fees paid by the lender or the borrower on its behalf. The Committee concluded that on the basis of existing requirements the issue should not be taken into its agenda.

The purpose of this session was for the staff to present the analysis of the comment letters received and propose finalising the agenda decision.

Analysis of comment letters

The staff indicated that the respondents agreed with the technical conclusion. However, some respondents requested the issue be addressed either by a narrow-scope amendment or an interpretation because more clarifications were needed. The staff believed that the most efficient and cost effective way to address the issue was by issuing an agenda decision. The staff believed that although the issue is widespread, respondents noted that in most cases the inclusion of fees paid to third parties would not affect the outcome of the 10 per cent test and, accordingly, would not have a material effect on entities.

Staff recommendation

The staff recommended finalising the agenda decision.


The Interpretations Committee agreed with the technical analysis prepared by the staff; however no decision was reached as to whether the conclusion should be published through an agenda decision or should be part of the next Annual Improvement project. There was no support for issuing an Interpretation on this matter.

The staff will present an analysis at a future meeting with a potential draft for the amendment as part of an annual improvement.  During the meeting it was also discussed whether it would be appropriate to issue an agenda decision so that users are aware of the Interpretation Committee analysis and also pursue an Annual Improvement. The reason provided was that the issuance of an annual improvement will be dependent on the Board’s view on the topic

The Chairman pointed out (as a separate issue) that the Interpretation Committee should have discussions about the role of the agenda decisions. The Chairman noted that they will meet with the Due Process Oversight Committee.

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