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Thursday 23 October 2014

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IFRS 9: Financial Instruments

IASB meeting summaries and observer notes


 IASB / FASB April 2012


 

 

The IASB and FASB discussed the business model assessment for amortised cost classification for financial assets and bifurcation of financial assets and financial liabilities.

Business model assessment for amortised cost classification for financial assets

The boards tentatively decided that financial assets would qualify for amortised cost if the objective of the business model is to hold those assets to collect contractual cash flows. The boards tentatively decided to clarify the primary objective of 'hold to collect' by providing additional implementation guidance on both the types of business activities and the frequency and nature of sales that would prohibit financial assets from qualifying for amortised cost measurement.

All IASB members and four FASB members agreed.

Bifurcation of financial assets and financial liabilities

The boards tentatively decided that financial assets with cash flows that are not solely principal and interest would not be eligible for bifurcation. Instead, they would be classified and measured in their entirety at fair value through profit or loss. The boards tentatively decided that financial liabilities would be bifurcated using their existing bifurcation requirements in IFRS 9 and US GAAP. The IASB also confirmed that the 'own credit' requirements in IFRS 9 would be retained. The FASB will discuss 'own credit' presentation requirements at a future FASB-only meeting. Eleven IASB members and five FASB members agreed.

Date: 4/17/2012