IFRS 9: Financial Instruments

May 2020

IFRS At A Glance – IFRS 9 Financial Instruments

IFRS 9 Financial Instruments (IFRS 9) was developed by the International Accounting Standards Board (IASB) to replace IAS 39 Financial Instruments: Recognition and Measurement (IAS 39). IFRS 9 incorporates the requirements of all three phases of the IASB’s financial instruments project, being:
  • Classification and Measurement,
  • Impairment, and
  • Hedge Accounting.
The IAS 39 requirements related to recognition and derecognition were carried forward unchanged to IFRS 9.
 

IFRS in practice: IFRS 9 Financial Instruments

IFRS 9 Financial Instruments1 (IFRS 9) was developed by the International Accounting Standards Board (IASB) to replace IAS 39 Financial Instruments: Recognition and Measurement (IAS 39). The IASB completed IFRS 9 in July 2014, by publishing a final standard which incorporates the requirements of all three phases of the financial instruments projects, being: – Classification and Measurement; – Impairment; and – Hedge Accounting. The IAS 39 requirements related to recognition and derecognition were carried forward unchanged to IFRS 9. This IFRS in Practice sets out practical guidance and examples about the application of key aspects of IFRS 9.
 

IFRS in practice: Applying IFRS 9 to Related Company Loans

IFRS 9 Financial Instruments makes no distinction between unrelated third party and related party transactions. Entities that prepare stand-alone financial statements are required to apply the full provisions of the standard to all transactions within its scope. This means related company loan receivables must be classified and measured in accordance with the requirements of IFRS 9, including where relevant, applying the Expected Credit Loss (ECL) model for impairment. Applying IFRS 9 to related company loans can present a number of application challenges as they are often advanced on terms that are not arms-length or sometimes advanced on an informal basis without any terms at all. In addition, they can contain features that expose the lender to risks that are not consistent with a basic lending arrangement. This publication sets out a summary of the key requirements of IFRS 9 (focusing on those that are likely to be most relevant to related company loans) and uses examples to illustrate how these requirements could be applied in practice.
 

IFRS in practice: Applying IFRS 9 to Related Company Loans in the Real Estate Sector

IFRS 9 Financial Instruments makes no distinction between unrelated third party and related party transactions. Entities that prepare stand-alone financial statements are required to apply the full provisions of the standard to all transactions within its scope. This means related company loan receivables must be classified and measured in accordance with the requirements of IFRS 9, including where relevant, applying the Expected Credit Loss (ECL) model for impairment.

The purpose of this publication is to illustrate the application of IFRS 9 to a number of common intragroup funding structures that a typical real estate group might have in place.
 

IFR bulletin: 2020/09 – Impairment Implications of COVID-19 (IFRS 9)

This IFR Bulletin focuses on the financial reporting implications of COVID-19 that relate to the expected credit loss (‘ECL’) requirements of IFRS 9. For further resources on applying the requirements of IAS 36 and IFRS 9, please refer to resources such as IFRS In Practice publications and other IFR Bulletins.