IFRIC09 BV2009 - IFRIC 9 IFRIC Interpretation 9...

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IFRIC 9 IFRIC Interpretation 9 Reassessment of Embedded Derivatives This version includes an amendment resulting from IFRSs issued up to 31 December 2008. IFRIC 9 Reassessment of Embedded Derivatives was developed by the International Financial Reporting Interpretations Committee and issued by the International Accounting Standards Board in March 2006. IFRIC 9 has been amended by IFRS 3 Business Combinations (as revised in January 2008). 1 1 effective date 1 July 2009 © IASCF 1
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IFRIC 9 C ONTENTS paragraphs IFRIC INTERPRETATION 9 REASSESSMENT OF EMBEDDED DERIVATIVES REFERENCES BACKGROUND 1–2 SCOPE 3–5 ISSUES 6 CONSENSUS 7–8 EFFECTIVE DATE AND TRANSITION 9 BASIS FOR CONCLUSIONS 2 © IASCF
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IFRIC 9 IFRIC Interpretation 9 Reassessment of Embedded Derivatives (IFRIC 9) is set out in paragraphs 1–9. IFRIC 9 is accompanied by 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 . © IASCF 3
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IFRIC 9 IFRIC Interpretation 9 Reassessment of Embedded Derivatives References IAS 39 Financial Instruments: Recognition and Measurement IFRS 1 First-time Adoption of International Financial Reporting Standards IFRS 3 Business Combinations Background 1 IAS 39 paragraph 10 describes an embedded derivative as ‘a component of a hybrid (combined) instrument that also includes a non-derivative host contract—with the effect that some of the cash flows of the combined instrument vary in a way similar to a stand-alone derivative.’ 2 IAS 39 paragraph 11 requires an embedded derivative to be separated from the host contract and accounted for as a derivative if, and only if: (a) the economic characteristics and risks of the embedded derivative are not closely related to the economic characteristics and risks of the host contract; (b) a separate instrument with the same terms as the embedded derivative would meet the definition of a derivative; and (c) the hybrid (combined) instrument is not measured at fair value with changes in fair value recognised in profit or loss (ie a derivative that is embedded in a financial asset or financial liability at fair value through profit or loss is not separated). Scope 3 Subject to paragraphs 4 and 5 below, this Interpretation applies to all embedded derivatives within the scope of IAS 39. 4 This Interpretation does not address remeasurement issues arising from a reassessment of embedded derivatives. 5 This Interpretation does not address the acquisition of contracts with embedded derivatives in a business combination nor their possible reassessment at the date of acquisition. * Issues 6 IAS 39 requires an entity, when it first becomes a party to a contract, to assess whether any embedded derivatives contained in the contract are required to be separated from the host contract and accounted for as derivatives under the Standard. This Interpretation addresses the following issues: (a) Does IAS 39 require such an assessment to be made only when the entity first becomes a party to the
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This note was uploaded on 02/22/2012 for the course ACCOUNTING 402 taught by Professor Sanaabadry during the Spring '12 term at DISD.

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IFRIC09 BV2009 - IFRIC 9 IFRIC Interpretation 9...

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