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Wednesday 22 October 2014

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Financial Instruments (replacement of IAS 39)

IASB meeting summaries and observer notes


 IASB 10 February 2010


 

 

The boards began their discussion of how to measure financial liabilities.

The boards affirmed their previous tentative decisions that financial liabilities that are not held to pay contractual cash flows should be measured at fair value through profit or loss.

The IASB tentatively decided that financial liabilities that are held to pay contractual cash flows and have 'non-vanilla' contractual cash flow characteristics should be bifurcated into a host and the embedded features. These components would be separately measured. This tentative decision responds to issues raised about recognising gains or losses arising from changes in an entity's own credit risk.

The FASB did not make any decisions about financial liabilities that are held to pay contractual cash flows that contain embedded derivatives, and that under the FASB's current tentative model would be required to be measured at fair value with changes in fair value recognised in net income. The FASB will first consider whether and how to address changes in an entity's own credit risk for financial liabilities with 'vanilla' contractual cash flow characteristics. Under the FASB's current tentative model, these changes would be required to be measured at fair value with changes in fair value recognised in other comprehensive income.

Date: 2/10/2010