Global Standards for the world economy

Friday 28 April 2017

Banner graphic

IFRS 9: Financial Instruments

IASB meeting summaries and observer notes

 IASB 24 August 2010



At this meeting, the Board continued its redeliberations on phase II of the project to replace IAS 39 Financial Instruments: Recognition and Measurement.

User feedback summary

At this meeting, the staff presented the feedback received from users on the exposure draft Financial Instruments: Amortised Cost and Impairment. The feedback was gathered during the ED's 8-month comment period from comment letters, user outreach meetings and a web-based user questionnaire.

Approach for redeliberation

The staff also presented the general approach for redeliberations. The staff intend first to address the impairment approach in the context of open portfolios. Following that, they will address the suitability of applying the approach for open portfolios to other situations and any other specific issues will be addressed. At the same time, they will also address any other specific issues.

The impairment approach

At this meeting, the Board discussed what the impairment approach should be in the context of amortised cost measurement. The Board discussed the following different impairment approaches:

  • expected loss approach;
  • incurred loss approach;
  • fair value-based approach; and
  • IAS 36 Impairment of Assets based approach.

The Board tentatively decided to move forward using an expected loss impairment approach.

Scope of expected loss: outlook periods and conditions

The Board also discussed the scope of expected loss (ie what outlook period and what conditions to consider when determining an expected loss).

Outlook period

The Board tentatively decided to consider an expected loss approach based on lifetime expected losses. The Board considered that using a shorter outlook period for determining expected losses would ignore some credit losses and convey an incomplete picture of profitability and the pricing of the financial assets.


The Board discussed the following alternatives on the conditions to consider when calculating expected loss:

  • through-the-cycle approaches;
  • determine expected loss based on past and existing conditions only; and
  • consider all reasonable and supportable information and conditions ('full scope' expected loss).

The Board tentatively decided that entities should consider all reasonable and supportable information (including forecasts of future conditions) when calculating expected losses. The Board considered that this approach would allow entities to portray the economic profitability of the lending transactions faithfully. This approach is also consistent with estimating cash flows projects for calculating value in use in IAS 36.

Date: 8/24/2010