ANNEX
INTERNATIONAL ACCOUNTING STANDARDS
IFRIC 9 | Amendments to IFRIC Interpretation 9 Reassessment of Embedded Derivatives |
IAS 39 | Amendments to International Accounting Standard 39 Financial Instruments: Recognition and Measurement |
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Amendments to IFRIC Interpretation 9
Reassessment of Embedded Derivatives
Paragraph 7 is amended. Paragraphs 7A and 10 are added.
CONSENSUS
7 | An entity shall assess whether an embedded derivative is required to be separated from the host contract and accounted for as a derivative when the entity first becomes a party to the contract. Subsequent reassessment is prohibited unless there is either (a) a change in the terms of the contract that significantly modifies the cash flows that otherwise would be required under the contract or (b) a reclassification of a financial asset out of the fair value through profit or loss category, in which cases an assessment is required. An entity determines whether a modification to cash flows is significant by considering the extent to which the expected future cash flows associated with the embedded derivative, the host contract or both have changed and whether the change is significant relative to the previously expected cash flows on the contract. |
7A | The assessment whether an embedded derivative is required to be separated from the host contract and accounted for as a derivative on reclassification of a financial asset out of the fair value through profit or loss category in accordance with paragraph 7 shall be made on the basis of the circumstances that existed on the later date of: For the purpose of this assessment paragraph 11(c) of IAS 39 shall not be applied (ie the hybrid (combined) contract shall be treated as if it had not been measured at fair value with changes in fair value recognised in profit or loss). If an entity is unable to make this assessment the hybrid (combined) contract shall remain classified as at fair value through profit or loss in its entirety. when the entity first became a party to the contract; and a change in the terms of the contract that significantly modified the cash flows that otherwise would have been required under the contract. |
EFFECTIVE DATE AND TRANSITION
10 | Embedded Derivatives (Amendments to IFRIC 9 and IAS 39) issued in March 2009 amended paragraph 7 and added paragraph 7A. An entity shall apply those amendments for annual periods ending on or after 30 June 2009. |
Amendments to International Accounting Standard 39
Financial Instruments: Recognition and Measurement
Paragraph 12 is amended. Paragraph 103J is added.
EMBEDDED DERIVATIVES
12 | If an entity is required by this Standard to separate an embedded derivative from its host contract, but is unable to measure the embedded derivative separately either at acquisition or at the end of a subsequent financial reporting period, it shall designate the entire hybrid (combined) contract as at fair value through profit or loss. Similarly, if an entity is unable to measure separately the embedded derivative that would have to be separated on reclassification of a hybrid (combined) contract out of the fair value through profit or loss category, that reclassification is prohibited. In such circumstances the hybrid (combined) contract remains classified as at fair value through profit or loss in its entirety. |
EFFECTIVE DATE AND TRANSITION
103J | An entity shall apply paragraph 12, as amended by Embedded Derivatives (Amendments to IFRIC 9 and IAS 39), issued in March 2009, for annual periods ending on or after 30 June 2009. |