IFRIC 19 STATES that the De-Recognition of ‘financial liabilities‘ takes place when it is extinguished i.e. when the obligation specified in the contract is discharged or canceled or expired. IFRIC 19 Effective Date An entity shall apply this Interpretation (IFRIC) for annual periods beginning on or after 1 July 2010. Earlier … Read More
Derecognition of Financial Assets as per IFRS 9 STATES that a ‘trade receivable should be de-recognized when an entity collects payment‘. The collection of payment signifies the end of any exposure to risks or any continuing involvement. Derecognition of Financial Assets – Introduction An entity shall DERECOGNIZE a Financial Asset … Read More
IFRS 9 Hedge Accounting APPLIES to all hedge relationships, with the EXCEPTION of fair value hedges of the interest rate exposure of a portfolio of financial assets or financial liabilities. There are various effective hedging strategies under to REDUCE ‘Market Risk’, depending on the asset or portfolio of assets being hedged. … Read More
IFRS 9 Derivatives STATES the definition and further EXPLAINS that derivatives including those linked to ‘unquoted equity investments‘ are MEASURED at fair value. [Value changes are recognized in Profit or Loss UNLESS the entity has elected to apply Hedge Accounting by designating the derivative as a hedging instrument in an … Read More
Impairment of Financial Assets as per IFRS 9 is based on ‘Expected Losses‘, UNLIKE IAS 36 which operates an Incurred Loss Model (i.e. Impairment is recognized only when an event has occurred which has caused a fall in the recoverable amount as compared to carrying amount of an asset). Anticipating … Read More
Reclassification of Financial Assets is required if and only if, the objective of the entity’s business model which manages those ‘Financial Assets’ changes. [Reclassification of Financial Liability is NOT allowed.] Reclassification of Financial Assets As per IFRS 9 if an entity determines that its business model has changed in a … Read More
Modification of Financial Instruments a Concept as per IFRS 9 (i.e. ‘Modification/Restructuring’ of financial liabilities and financial assets). Modification of Financial Instruments The ‘Modification Gain or Loss‘ is determined by recalculating the gross carrying amount of the Financial Asset or Financial Liability by discounting the modified cash flows using the … Read More
Compound Financial Instrument as per IFRS 9 is a ‘Financial Instrument’ that contains BOTH a liability component and an equity component. It is a Non-Derivative Financial Instrument that CONTAINS two components: An EXAMPLE is a ‘Convertible Bond‘. (The company issues a bond that can be converted into equity in the … Read More
Regular Way Transaction can be DEFINED as a purchase or sale of a ‘Financial Asset‘ under a contract whose terms REQUIRE delivery of the asset within the time frame established generally by regulation or convention in the marketplace concerned. For example, ‘Trades’ on the Pakistan Stock Exchange (PSX) are typically … Read More
Financial Instruments Definition as per IFRS 9 STATES it could be ‘Financial Asset‘, ‘Financial Liability‘ or an ‘Equity Instrument‘ of another entity. The objective of IFRS 9 is to ESTABLISH principles for the financial reporting of financial assets and liabilities that will present relevant and valuable information to users of … Read More