IFRS 9 Financial Instruments 2012
Update 2017: This is an article from 2012 and I wrote the totally updated article in 2017 here.
However, there’s a valuable discussion in the comments to this article, and that’s why I did not delete it, but left it here.
Please, if you have some questions, read the new article and post your comments there. I will not respond to any new comments here. Thank you!
The new financial instruments’ standard – IFRS 9 was under development for a long time and in July 2014, it was finally completed. Its aim is to replace IAS 39 —older standard dealing with financial instruments.
International Accounting Standards Board (IASB) decided to replace IAS 39 gradually in the process consisting of 3 phases: Phase 1—Classification and measurement of financial assets and financial liabilities, Phase 2—Impairment Methodology and Phase 3—Hedge Accounting.
I wrote this summary at the time when Phase 1 was completed and Phases 2 and 3 were still to go. However, by the end of July 2014, IFRS 9 is complete. As the process of updating my videos and articles requires some time, I’ll update these free materials fully within a few weeks. However, I’ll make note here about outdated issues, so don’t worry, I’ll not fool you with the old things.
After all these amendments, mandatory effective date of IFRS 9 was set to 1 January 2018.
In this summary, I will focus just on IFRS 9. For summary of IAS 39, please refer here.
And if you’d like to learn more about differences between IFRS 9 and IAS 39, please read more in the article IAS 39 vs. IFRS 9: Clarifying the Confusion.
Objective of IFRS 9
IFRS 9 establishes principles for the financial reporting of financial assets and financial liabilities. Here, the principal aim is to present relevant and useful information to users of financial statements for their assessment of the amounts, timing and uncertainty of an entity’s future cash flows.
Scope of IFRS 9
Here, IFRS 9 makes reference to IAS 39, because it says that IFRS 9 shall be applied to all items within the scope of IAS 39.
Recognition and Derecognition
This chapter prescribes WHEN the financial asset and financial liability shall be recognized or derecognized in the financial statements.
Paragraphs related to recognition and derecognition of financial assets and financial liabilities in IFRS 9 are to the great extent carried over from IAS 39. Therefore, I carry over the relevant summary from the previous article about IAS 39 for your convenience. All information carried over from IAS 39 summary is put to the frame.
Initial recognition
IFRS 9 requires recognizing a financial asset or a financial liability in the statement of financial position when the entity becomes a party to the contractual provisions of the instrument.
Derecognition of financial assets
Standard IFRS 9 provides extensive guidance on derecognition of a financial asset. Before deciding on derecognition, an entity must determine whether derecognition is related to:
- a financial asset (or a group of similar financial assets) in its entirety, or
- a part of a financial asset (or a part of a group of similar financial assets)
The part must fulfill the following conditions (if not, then asset is derecognized in its entirety):
- the part comprises only specifically defined cash flows from a financial asset (or group)
- the part comprises only a fully proportionate (pro rata) share of the cash flows from a financial asset (or group)
- the part comprises only a fully proportionate (pro rata) share of specifically identified cash flows from a financial asset (or group).
An entity shall derecognize the financial asset when:
- the contractual rights to the cash flows from the financial asset expire, or
- an entity transfers the financial asset and the transfer qualifies for the derecognition.
Transfers of financial assets are discussed in more details. First of all, an entity must decide whether the asset was transferred or not. Then, if the financial asset was transferred, the entity must determine whether also risks and rewards from the financial asset were transferred.
Was the financial asset transferred?
An entity transfers a financial asset if either the entity transfers the contractual rights to receive the cash flows from a financial asset, or the entity retains the contractual rights to receive the cash flows from the asset, but assumes a contractual obligation to pay these cash flows to one or more recipients under an arrangement that meets the following conditions:
- the entity has no obligation to pay amounts to the eventual recipient unless it collects equivalent amounts on the original asset
- the entity is prohibited from selling or pledging the original asset (other than as security to the eventual recipient),
- the entity has an obligation to remit any cash flows it collects on behalf of eventual recipients without material delay
Were the risks and rewards from the financial assets transferred?
If substantially all the risks and rewards have been transferred, the asset is derecognized. If substantially all the risks and rewards have been retained, the entity must continue recognizing the asset in its financial statements.
If the entity has neither retained nor transferred substantially all of the risks and rewards of the asset, then the entity must assess whether it has retained control of the asset or not.
If the entity does not control the asset then it must derecognize the asset. But if the entity has retained control of the asset, then the entity continues to recognize the asset to the extent of its continuing involvement in the asset.
Transfers of financial assets are then discussed in much greater detail in IFRS 9 and also, application guidance in paragraph 36 summarizes derecognition steps in a simple decision tree. You can familiarize yourself with the decision tree in the video below this summary.
Derecognition of a financial liability
An entity shall derecognize a financial liability when it is extinguished. It is when the obligation specified in the contract is discharged, cancelled or expires.
Classification of financial instruments
Classification of financial assets
IFRS 9 classifies financial assets into 2 main categories:
- Financial asset subsequently measured at amortized cost: a financial asset falls into this category if BOTHof the following conditions are met:
- the asset is held within a business model whose objective is to hold assets in order to collect contractual cash flows, and
- the only contractual cash flows are payments of principal and related interest on specified dates.
- Financial assets subsequently measured at fair value: all financial assets not falling to the above category.
Here, we can see significant reduction of rules, because if you remember IAS 39 classified financial assets into 4 categories. In this case, IFRS 9 brings certain simplification.
Moreover, regardless above 2 categories, a reporting entity may decide to designate the financial asset at fair value through profit or loss at its initial recognition. It effectively means that under IFRS 9 all financial assets can be measured at fair value with no need to split them into categories. Well, whether that’s practical and doable or not, that’s another question.
Classification of financial liabilities
IFRS 9 classifies financial liabilities as follows:
- Financial liabilities at fair value through profit or loss: these financial liabilities are subsequently measured at fair value and here, all derivatives belong
- Other financial liabilities measured at amortized cost using the effective interest method
IFRS 9 mentions separately some other types of financial liabilities measured in a different way, such as financial guarantee contracts and commitments to provide a loan at a below market interest rate, but here, we will deal with 2 main categories.
As you can see, not much change in comparison to IAS 39. An entity can designate the financial liability at fair value through profit or loss at its initial recognition, too—regardless of the category.
Impairment of financial assets
New rules about the impairment of financial assets were added only in July 2014.
IFRS 9 requires entities to estimate and account for expected credit losses for all relevant financial assets, starting from when they first acquire a financial instrument.
When measuring expected credit losses, entities will be required to use all relevant information that is available to them (without undue cost or effort).
Please, read more about the new IFRS 9 impairment model here.
Embedded derivatives
Much of the concept of embedded derivatives was taken from IAS 39 to IFRS 9, however, there is a change.
To refresh your knowledge from IAS 39: Embedded derivative is simply a component of a hybrid instrument that also includes a non-derivative host contract. Careful here, because IFRS 9 says that a derivative that is attached to the financial instrument, but is contractually transferable independently of that instrument or has a different counterparty, is not embedded derivative. Instead, it is a separate financial instrument.
Now, according to IFRS 9, you should look whether the host contract is a financial asset within the scope of IFRS 9 or not.
If the host is within the scope of IFRS 9, then the whole hybrid contract shall be measured as one and not be separated. This is quite different from IAS 39. Under IAS 39, if you have a host contract that is a financial asset with some embedded derivative whose economic characteristics are not closely related, these 2 would have been separated. But not under IFRS 9, because when a host is a financial asset, then no separation is required.
If the host contract is outside the scope of IFRS 9 (some non-financial asset), then IFRS 9 requires separation of embedded derivative from the host contract when the following conditions are fulfilled (and yes, again I carry forward from IAS 39):
- the economic risks and characteristics of the embedded derivative are not closely related to the economic risks and characteristics of the host contract
- a separate instrument with the same terms as the embedded derivative would meet the definition of a derivative
- the hybrid instrument is not measured at fair value with changes in fair value recognized in the profit or loss.
Separation means that you account for embedded derivative separately in line with IFRS 9 and the host contract in line with other appropriate standard. If an entity is not able to do this, then the whole contract must be accounted for as a financial asset at fair value through profit or loss.
Measurement of financial instruments
Initial measurement
Financial asset or financial liability shall be initially measured at its fair value. When financial asset or financial liability are NOT measured at fair value through profit or loss, then directly attributable transaction costs shall be included in the initial measurement.
Subsequent measurement
Due to the fact that IFRS 9 reduced the number of categories of financial assets and simplified the matter, also their subsequent measurement is simple. Just look to the titles of the categories and it will become clear.
Thus, financial assets shall be subsequently measured either at fair value or at amortized cost.
Subsequent measurement of financial liabilities is carried over from IAS 39. Financial liabilities held for trading are measured at fair value through profit or loss, and all other financial liabilities are measured at amortised cost unless the fair value option is applied.
With regard to recognizing gains and losses from subsequent measurement, IFRS 9 requires to put them to profit or loss with the following exceptions:
- when there is a hedging relationship and hedge accounting applies – please, refer to IAS 39 summary
- when a financial asset is an equity instrument not held for trading, then an entity can irrevocably at initial recognition to choose to present changes in fair value of that instrument in other comprehensive income
- when a financial liability is designated at fair value through profit or loss, then the change in fair value attributable to changes in the credit risk shall be presented in other comprehensive income and the remaining change in profit or loss.
Hedge accounting
Hedge accounting requirements were completed on 19 November 2013. Basic rules for hedge accounting, types of hedges and mechanics of accounting for each type of hedge remain the same as in IAS 39. However, IFRS 9 widens the situations in which the hedge accounting can be applied. For more details please read an article about differences in hedge accounting between IAS 39 and IFRS 9.
In July 2014, IFRS 9 introduced a substantially-reformed model for hedge accounting, with improved disclosures about risk management activity.
Effective date and transition
Mandatory effective date for IFRS 9 application is 1 January 2018 with earlier application permitted.
As well as IAS 39, also standard IFRS 9 addresses all issues in a greater detail and contains application guidance.
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64 Comments
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Hello. Do we discount trade receivalbes to present value? Payments of which are contractually deferred beyond current accounting period?
Hello, Khan,
yes, you do! S.
Identify the significant difference introduced by IFRS 7 and IFRS 9 in the accounting treatment of financial instrument.Express your opinion on the relevance and practical of these amendments.
Dear Edward,
I am sorry, I can’t help out with your homework 🙂 Your opinion should be YOUR opinion 🙂
Dear Sylvia,
what to do in a situation where our company was a loan guarantor and debtor did not pay its debt (we have to pay). How to account in this situation? No provision or similar was recognized in the previous years… Thanks a lot for your help!
Hi Silvia,
You really do have a great approach to breaking down this information in a logical, understandable format. Thank you for that!
I had a question regarding when investment funds (investment Co’s) invest in a variety of debt instruments and classify the portfolio as trading. In the case of hybrid instruments such as convertible bonds, under IFRS is there a scope exception for these types of investment funds so that they do not half to bifurcate the host (debt piece) from the convertible feature(embedded derivative)? since these securities are classified as “trading”?. Under US GAAP, there us a scope exception under ASC 320 for investment companies (ASC 946).
Hi Tony,
In any case, if you designate your instrument at fair value through profit or loss (which you would anyway do with this type of debt instruments held for trading), then you do not need to separate the host contract from embedded derivative. S.
Hi
Does IFRS 9 allow us to recognise the interest rate at the coupon rate instead of effective interest method for FVPL
Dear Mohamed, well, in this case, you don’t have the other choice, do you? You do NOT apply the effective interest method here. Therefore, the coupon received plus fair value gain/loss will appear in your profit or loss when you apply FVTPL option for your bonds/loans/whatever. S.
Transfer of valuation class from FVTPL to AFS PCI IS ALLOWED AS PER IAS 39?
Hi Silvia,
Am a bit confused regarding the treatment of discount or prmeium for debt insturments under FVOCI should this be included as part o fthe principal amount alued under FV or should it be separate and ammortized over the life term of the bond, please advise.
Thanks
Do you recommend your kit for a person who does not have any prior IFRS knowledge? I want to become expert of IFRS 9. will your kit help me? Please also mention whether you have included training for all IFRSs or only IFRS 9. I want to learn all the accounting standards but my main focus is IFRS 9 now. Please guide me. Thanks.
Dear Nina,
the IFSR Kit takes you from the very beginning to more advanced topics. If you have no previous IFRS knowledge, that’s a challenge, but IFRS Kit can help. It does not cover all IFRSs in a video format and a list of covered topics can be downloaded on http://www.cpdbox.com/ifrs-kit .
For the remaining standards, we provide textbooks.
However, IFRS 9 is very well covered and it really starts from the very basics to the most advanced areas.
Hope it helps
S.
Hi Silvia,
This article is really helpful in understanding the fundamental concepts of IFRS 9.
I just need to know a practical example of when an entity can make an irrevocable election to recognize changes in fair value through Other Comprehensive Income?
For example, when you hold shares to “store value” and get dividends, rather than trading them frequently – in this case, it is maybe more reasonable to present fair value changes in OCI.
Thank You Silvia.
Is that treatment suitable for mutual funds?
I shall be grateful if you could explain the treatment of investment in mutual funds.
Good Day…
I would like to know the accounting treatments for a bonus issue which has been received and how it will affect the valuation of the shares in the B/S?
Recently i was asked that in a balance sheet where we can see the IFRS 9 implementation ? Could you please give an example ?
Hi Silvia,
I love your IFRS kit. Worth every cent I paid. A question for IAS 39 and IFRS 9 and specifically amortized cost and EIR. For every loan on a date of issue we have a repayment schedule we is the basis for your cash flow projection. I use it to calculate XIRR (EIR) and apply to cash outflows to separate true interest and true repayment of principal per each year. But one year before maturity Company`s management decided to repay the loan. How I can calculate the effect on my PNL and outstanding loan balance and how shall I book it. I suppose nor IAS 9 and nor IFRS 9 is clear on that. Please help! 🙂 Thank you.
Hi Vadims,
this is better to show on excel file rather than on a comment, but I’ll try to describe. When the company repays before maturity, then you simply recognize an interest for the period until the day of repayment, and the repayment entry is debit cash credit financial asset. I assume the company will repay the balance outstanding in line with the cash flow schedule. If everything is OK, there should not be any difference and if yes, it is recognized in P/L. S.
Thank you, Silvia! It would be so great if you could discuss this topic in your upcoming newsletters.
Dear Silvia.
I have a question about FVOCI (debt) instrument. I’ve read a lot about it. But still don’t understand how change in fair value influence the interest revenue. I mean if the fair value changes, does the gross carrying amount or amortised cost change. And so the interest revenue is accounted on the new fair value. I’m confused.
Hi Ket, I know this is a bit confusing. Just remember, that the interest revenue is NOT affected by the change in the fair value. You simply book the interest revenue based on amortized cost method regardless fair value changes.
Fair value change, or better said – difference between year-end’s fair value and year-end’s amortized cost – is recognized in OCI.
Hope it helps. S.
Yes, it helps a lot. But new questions arise. Just to clear up. The loss allowance doesn’t influence the interest revenue too.?
The interest revenue of assets accounted on amortized cost may change if its credit impaired (the revenue is calculated on amortized cost not gross carrying amount).
But with the FVOCI instruments there may be no separate account for loss allowance. And so we always notwithstanding if the asset impaired or not, account interest revenue on the gross carrying amount (amortized cost) regardless of accumulated loss allowance. Don’t know how even to explain it. Hope you understand me.
Dear Silvia
Can a debt investment backing reinsurance liabilities be classified as FVTPL in case of a reinsurance company as I would also need to hold corresponding reserves for the reinsurance liabilities that would be charged to my income statement. If I classify it as FVTOCI, it may lead to accounting mismatch. Please advise. Also, I understand that the mandatory effective date for application of this standard is 1 Jan 2018 and not 2015, Please confirm if this is right.
When is the new video being uploaded for the update to IFRS 9? Also, would the above summary video apply to ACCA exams for June 2015 onwards? Or would I have to read an updated summary from somewhere?
Could you please help me differenciate clearly between Compound FI and Hybrid FI ?( not just the ingredients of each) If possible, please give me examples
Hi Trang,
The difference is that compound FI contains liability and equity part and it is NON-derivative, while hybrid FI contains derivative and non-derivative part.
Examples:
Compound FI = bond convertible to ordinary shares
Hybrid FI = contract to purchase oil between Swiss and Saudi Arabian company with the payment in EUR (there’s a foreign currency forward related to EUR embedded in this contract, that’s why it is hybrid).
S.
Hi silvia,
Can you please explain a little about the rule and accounting entries with one example related of the impairment on securities (stocks)and bond.
Hi Himanshu,
yes, I can do it, but it’s too elaborate for including it in the comment. I will do it in some of my future articles. Kind regards, S.
I have some queries’:
1. Whether CCIRS, IRS, Forwards all qualify for cash flow hedge accounting if I am fixing my ultimate liability?
2. Suppose I have an existing foreign currency borrowing & I take a CCIRS to hedge the same & wish to follow hedge accounting.
So the change in fair value of derivative will go in OCI, but what about exchange difference which will result on borrowing? Should I take that to P&L as per IAS 21? Won’t it create a mismatch?
3. If my variable rate borrowing is say Libor+ 0.25 in Foreign Currency & by hedging it, I end up paying fixed 11% in local currency. So when I provide for Interest expense, should I provide it at L+0.25 or 11%?
question:- for years we have equity account for a 33% stake in a company (A). The company(A) is about to raise additional capital via issue of shares and we, as parent, are not willing to subscribe and eventually will get diluted to say 6%. How do we treat the associate going forward at both group level and parent level? What will be the P&L, OCI implications at time of dropping to 6%?
Thanks
H
Hi Hans,
it’s not possible to answer this complex topic of changing ownership in comments, I am sorry. But if, as a result of share dilution, your investment changes from subsidiary to associate, then of course, you need to stop full consolidation and start equity method from that day. That’s in the consolidated financial statements. In your separate financial statements, it all depends on how you carried your investment under IAS 27.
Hello Ma’am Silvia;
I just want to ask if a stock dividends or bonus issue received by the investor qualifies as a financial instrument and what is the accounting treatment by the investor.
thanks much 🙂
That would depend on the specific contract, but it seems it would be a financial asset for the investor.
Thank you Ma’am Silvia.
But I want to clarify further. Assuming I have a 1,000 share investment in equity instruments of another entity costing $1,000 and I received a 100 shares as a result of bonus issue on November when the reporting date is December 31,
1. Do i need to record the fair value of the 100 shares I received on November? If yes, will it be allocated to the original cost of my investment?
2. Will be the accounting treatment be the same when my investment is classified as financial asset at fair value through profit or loss and financial asset through other comprehensive income?
Thank you very much!
Darell, in my opinion, you should not book anything at the time of receiving bonus shares. The reasons are:
1) You have not made any investment at the time of receiving bonus shares, just their number increased (but the investment remained the same)
2) Issuing of bonus shares does not add to the value of an investment or issuing company as a whole, it only reduces the amount per share.
However, what I would certainly do, is to examine whether fair value of my investment decreased or not as a result of share issue (in other words, whether your share is diluted or not, how it impacted the fair value per share and your total holding etc.). Maybe it will have no impact.
S.
Kindly anyone can arrange me the latest video lectures on IAS 32, 39 and IFRS 9. Earliest reply will be highly appreciated.
Hi Muhammad,
for the free resources related to financial instruments, please refer to http://www.cpdbox.com/ifrs-financial-instruments
I have also covered all three standards plus much more in my premium learning package The IFRS Kit http://www.cpdbox.com/ifrs-kit
Kind regards
S.
It agree, this idea is necessary just by the way
I only have Visa Debit Card, can I made the payment through it?
Unfortunately, it works only with the credit cards. If you want, we can send the details for direct wire transfer. Just contact us via e-mail. S.
Dear Silvia, your IFRS in 1 Day. Can I use as my learning material for IFRS conversion purpose
Dear Abayomi, while IFRS In 1 Day is really great for introduction to IFRS, it is not sufficient to make conversion. You’ll get a solid overview of basic IFRS rules. However, my other package, the IFRS Kit, teaches how to do conversions step by step, including making adjustments, drafting balance sheet, etc. S.
Thank you i quiet appreciates your reply, but how can i get the IFRS Kit if i pay for it online since i am resides in Lagos, Nigeria.
Dear Abayomi, not a problem. Lots of our students come from Nigeria. If you have a credit card, you can pay us with the safe US payment gate here: http://sites.fastspring.com/ifrsbox/product/ifrs-kit-offer (price is recalculated to USD). Kind regards, S.
hey !
whats the difference between debt instrument & a financial liability ?
Hi Mohammad!
Debt instrument can be both a financial asset (for example, government bond that you hold) or a financial liability (for example, loan that you took).
A financial liability has its own definition, and can comprise debt instruments (issued bonds, debentures…), trade payables (these are NOT debt instruments basically), derivative financial liabilities etc.
So these 2 groups of instruments have some things in common, but they are not really interchangeable. S.
silva please , I want a explanation and questions to financial assets
Dear Reginald,
I have dedicated full 5 hours to financial instruments in my IFRS Kit. There are tons of explanations, so if you are serious, I strongly recommend you to consider it. 🙂 Plus you have my personal support 🙂 But if you need just 1 or 2 answers, then go ahead, I’ll try 🙂
hi iam doing master in commerce in India , when i study about ifrs and other accounting setter bodies i felt iam not accountant because i can not understanding much of the accounting meaning of lot on concepts plz advise me
Hi Mohammed, I think you need to find the training or tutor that fits you. Whether you select my courses or something else, you should be comfortable with it, make baby steps in your learning and study lots of examples. If you watch my videos and you understand and like them, then my courses would be a good fit for you. If you like a work of someone else, then follow him 🙂 There’s no other advice, just follow what you like 🙂 S.
thanks so much
Please provide updates on IFRS 9….their is any changes in that because i got to that prevoiusly we have held for Trading, AFS and HTM but know we have only 2 Of them,…
Hi, IFRS 9 in this article is fully updated. Categories of HFT, AFS and HTM were arranged by older IAS 39, not IFRS 9.
Dear Silvia,
how do we treat the issuing costs of a compound instrument(a convertible bond)
To the Invester(Financial Asset, It would be accounted for under FVTPL) meaning it will be expensed directly to P/L Right?.
What about to the Issuer, will the issuing cost be expensed or they will be deducted from the cost Debt and Equity on an apportionment basis?
Hi Moses,
from the investor’s point of view: yes, to P/L, as the financial asset does not meet the contractual cash flow test and therefore, it must be classified at fair value through profit or loss (if you are applying IFRS 9).
From the issuer’s point of view: how does the issuer classify the resulting financial liability? And also, would the cost of issuing the convertible bond be the same as cost for issuing the same bond but without the conversion feature? If FL is at amortized cost and the answer to the second question is yes, then I would adjust my effective interest rate.
Anyway, I have just launched the brand new course on financial instruments where I solve these questions in detail – it’s part of my IFRS Starter Kit and I highly recommend it for anyone dealing with this difficult area.
S.
Hi Silvia,
Is there difference between IAS and IFRS??IS it difference in Nomenclature only about IAS and IFRS ? If i prepare my financial statements as per IFRS mean I am not following IAS ?
Can you clarify me about the difference?
Hi Suman,
there is no difference – it is just the matter of naming individual standards.
IAS = International Accounting Standards, IFRS = International Standards for Financial Reporting. All standards issued before 2001 were IAS, all standards issued AFTER 2001 are IFRS. IASs were not renamed after the change, that’s why there are both IAS and IFRS. But they still comprise the same set of financial reporting rules. So if you read about IFRS now, it means both older IAS and newer IFRS.
Hope it’s clear now.
Silvia, IFRSbox.com
Thank you for your prompt reply Silvia.Really appreciated.
Hello. Under IFRS9, hybrid instruments no longer need to be bifurcated into liability and equity components. However, I read somewhere that the IASB is considering reintroducing this as people became so accustomed to bifurcation when IAS 32 and 39 were introduced. Would you be able to explain bifurcation in detail and its benefits (if any) to the balance sheet?
Hello, Jonathan,
nice question. Let me clarify a few things first:
– I guess you mean “compound” financial instruments rather than “hybrid” financial instruments. The difference is that compound FI contains liability and equity part and it is NON-derivative, while hybrid FI contains derivative and non-derivative part. So let me talk about compound instruments as that’s what you have described.
– IFRS 9 replaces IAS 39. Standard IAS 39 does not describe compound instruments – instead, IAS 32 does. And IAS 32 remains still in place, although with some amendments.
And now to your question:
“Bifurcation” of equity and liability means that you must measure liability part of instrument first, then you measure the instrument as a whole and then you determine the value of equity part as value of the whole compound instrument less value of a liability part. Then you recognize liability part as a liability and equity part of the same instrument as an equity. That’s very simplistic, but I plan to write an article with video about it and you can come back to this issue later on.
And what are the benefits? Well, I think that if you show equity part of compound instrument separately from liability, you will give to your shareholders the information about something that can potentially dilute their share in the company (for example, convertible debt that can turn to shares in the future – those new shares will potentially dilute share of existing shareholders on company’s equity).
Have a nice day and thanks again for this question 🙂
Silvia, IFRSbox.com
Hey I read on opentuition. com Paper P2 notes under IFRS9 saying the adoption starts January1,2013 and now I’m confused
Hey, mechot,
original adoption date was 1 January 2013, that’s right. But on 16 December 2011, IASB issued amendments to IFRS 7 and IFRS 9 and these amendments postponed the date of obligatory adoption of IFRS 9 to 1 January 2015. Of course, earlier adoption is permitted.
Good luck to your exams!
Silvia, IFRSbox.com