Amortised Cost Measurement

The IASB met on 23 June 2026 to discuss:

• the project plan (Agenda Paper 11); and
• the approach for determining whether a modification of a financial instrument is substantial, resulting in derecognition (Agenda Paper 11A).

Project plan (Agenda Paper 11)

The IASB received an update on the project plan. The IASB was not asked to make any decisions.

Determining whether a modification results in derecognition (Agenda Paper 11A)

The IASB discussed how it should clarify requirements in IFRS 9 Financial Instruments for determining whether a modification of a financial asset or a financial liability is substantial, resulting in derecognition.

The IASB tentatively decided to propose that:

1. an entity would determine whether a modification of a financial instrument is substantial based on a holistic analysis of the changes in the contractual cash flows. The entity would consider qualitative and quantitative factors as part of this analysis. The ‘10 per cent test’ as described in paragraph B3.3.6 of IFRS 9 could supplement the analysis but would not be the decisive factor in isolation.
2. the factors an entity would consider in determining whether a modification is substantial include, but are not limited to:
   1. a change in the currency in which principal or interest is denominated, which would suggest the modification is substantial.
   2. a change in cash flow characteristics that alters the assessment of whether the cash flows are solely payments of principal and interest for a financial asset; or whether an embedded derivative is separated from the host contract for a financial liability. Such a change would suggest the modification is substantial.
   3. a change in borrower counterparty, which would suggest the modification is substantial, unless the change is between entities under common control.
   4. the reason for the modification. A commercial renegotiation to reset the financial instrument to current market terms would suggest the modification is substantial. Conversely, a modification attributable to the borrower’s financial difficulty would suggest the modification is not substantial.
3. the relevance of a specific factor, and its weight compared to other factors, would depend on the type of financial instrument, the characteristics of the financial instrument and general economic conditions. An entity would be required to consider reasonable and supportable information that is available without undue cost or effort and that is relevant for the particular financial instrument being assessed.

Eleven of 13 IASB members agreed with this decision.