IFRS 9: Financial instruments

IFRS 9

IFRS 9 Financial Instruments brings fundamental changes to financial instrument accounting as it replaces IAS 39 Financial Instruments: Recognition and Measurement. Our specialists explain the new expected credit loss model for financial asset impairment, the impact of the business model on accounting and the consequences of fewer categories for assets. There are a number of decisions and choices to be made during transition to the new standard but some good news: hedge accounting rules have been eased. Banks and financial institutions are most affected but corporates need to consider the new requirements as well.

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Demystifying IFRS 9 impairment - 6. Measuring expected credit losses (Part 2)

Our guidance on IFRS 9 follows the three main aspects of the standard, classification and measurement of financial assets, applying the expected credit loss model to financial assets and hedge accounting.

Classification and measurement

IFRS 9 requires financial assets to be measured at amortised cost or fair value. Fair value changes are in profit or loss or taken to OCI with no recycling. Fair value through OCI is a consequence of the business model for some assets but an irrevocable election at initial recognition for other assets. This may be the least complex area of the new standard but there will be significant impacts. Our specialists share their insights in our suite of publications, videos and tools.

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Impairment

Moving to an expected credit loss model is a major challenge, particularly for banks and other lendors. Our specialists share their insights and clarify the complicated requirements of this long anticipated area of IFRS 9. If you're looking for an overview or a deep dive on a technical issue, our suite of publications, videos and frequently asked questions should help you.    

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Hedging

Hedge accounting under IFRS 9 is more attractive than under IAS 39. And it may be easier to comply with the requirements although 'easier' is a relative term. Hedge accounting is still optional but a wider range of instruments qualify as hedging instruments, effectiveness testing is simplified and more things can be hedged. Interested? Our specialists share their insights on how hedge accounting under IFRS 9 will work.

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Ian Farrar

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