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IASB discussion paper on 'own credit risk'

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18 Jun 2009

The IASB has published a discussion paper on the role of an entity's own credit risk in liability measurement.

The discussion paper (DP/2009/2 Credit Risk in Liability Measurement) is accompanied by a staff paper that describes the most common arguments for and against including credit risk in measuring liabilities.

The paper notes that IFRSs require profit or loss resulting from changes in 'own credit' to be booked when debt is fair valued, but that some see the outcome as counter-intuitive (gains recognised in the face of deteriorating credit). The discussion paper addresses this concern and examines bases for liability measurement other than fair value.

The issue of 'own credit risk' has relevance to a range of IASB projects, in particular in the accounting for financial instruments, insurance, fair value measurement, and provisions, contingent liabilities and contingent assets. Comments are due by 1 September 2009. Click for IASB Press Release (PDF 98k).


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