ifric16 - IFRIC 16 IFRIC Interpretation 16 Hedges of a Net...

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IFRIC 16 © IASCF A1089 IFRIC Interpretation 16 Hedges of a Net Investment in a Foreign Operation This version includes amendments resulting from IFRSs issued up to 31 December 2009. IFRIC 16 Hedges of a Net Investment in a Foreign Operation was developed by the International Financial Reporting Interpretations Committee and issued by the International Accounting Standards Board in July 2008. IFRIC 16 has been amended by Improvements to IFRSs (issued April 2009). * * effective date 1 July 2009
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IFRIC 16 A1090 © IASCF C ONTENTS paragraphs IFRIC INTERPRETATION 16 HEDGES OF A NET INVESTMENT IN A FOREIGN OPERATION REFERENCES BACKGROUND 1–6 SCOPE 7–8 ISSUES 9 CONSENSUS 10–17 Nature of the hedged risk and amount of the hedged item for which a hedging relationship may be designated 10–13 Where the hedging instrument can be held 14–15 Disposal of a hedged foreign operation 16–17 EFFECTIVE DATE 18 TRANSITION 19 APPENDIX Application guidance ILLUSTRATIVE EXAMPLE BASIS FOR CONCLUSIONS FOR THE ACCOMPANYING DOCUMENTS LISTED BELOW, SEE PART B OF THIS EDITION
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IFRIC 16 © IASCF A1091 IFRIC Interpretation 16 Hedges of a Net Investment in a Foreign Operation (IFRIC 16) is set out in paragraphs 1–19 and the Appendix. IFRIC 16 is accompanied by an illustrative example and a Basis for Conclusions. The scope and authority of Interpretations are set out in paragraphs 2 and 7–17 of the Preface to International Financial Reporting Standards .
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IFRIC 16 A1092 © IASCF IFRIC Interpretation 16 Hedges of a Net Investment in a Foreign Operation References •I A S 8 Accounting Policies, Changes in Accounting Estimates and Errors •I A S 2 1 The Effects of Changes in Foreign Exchange Rates •I A S 3 9 Financial Instruments: Recognition and Measurement Background 1 Many reporting entities have investments in foreign operations (as defined in IAS 21 paragraph 8). Such foreign operations may be subsidiaries, associates, joint ventures or branches. IAS 21 requires an entity to determine the functional currency of each of its foreign operations as the currency of the primary economic environment of that operation. When translating the results and financial position of a foreign operation into a presentation currency, the entity is required to recognise foreign exchange differences in other comprehensive income until it disposes of the foreign operation. 2 Hedge accounting of the foreign currency risk arising from a net investment in a foreign operation will apply only when the net assets of that foreign operation are included in the financial statements. * The item being hedged with respect to the foreign currency risk arising from the net investment in a foreign operation may be an amount of net assets equal to or less than the carrying amount of the net assets of the foreign operation. 3 IAS 39 requires the designation of an eligible hedged item and eligible hedging instruments in a hedge accounting relationship. If there is a designated
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This note was uploaded on 02/26/2011 for the course ACCOUNTING 310 taught by Professor Cruz during the Spring '11 term at Xavier - Ateneo de Cagayan.

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ifric16 - IFRIC 16 IFRIC Interpretation 16 Hedges of a Net...

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