IASB Amends IFRS 9 and IAS 28

International Financial Reporting Standards (IFRS): Prepayment Features with Negative Compensation

The International Accounting Standards Board (IASB) has issued amendments to International Financial Reporting Standards (IFRS): Prepayment Features with Negative Compensation - Amendments to IFRS 9; and Long-term Interests in Associates and Joint Ventures - Amendments to IAS 28. These documents amend IFRS 9, Financial Instruments, and International Accounting Standards (IAS) 28, Investments in Associates and Joint Ventures, respectively.

These amendments are narrow in scope and are intended to address implementation issues. The IFRS 9 amendments permit companies to measure particular prepayable financial assets with so-called negative compensation at amortised cost or at fair value through other comprehensive income if a specified condition is met, rather than at fair value through profit or loss.

The IAS 28 amendments clarify that companies should account for long-term interests in an associate or joint venture, to which the equity method is not applied, using IFRS 9.

The IASB has also provided an illustrative example to demonstrate application of IFRS 9 and IAS 28 to long-term interests in an associate or joint venture. The example shows how the entity may apply IFRS 9 in accounting for the long-term interest and IAS 28 to its net investment in an associate. The example notes that the analysis does not represent the only manner in which IAS 28 may be applied.

The amendments to IFRS 9 and IAS 28 are effective for accounting periods beginning on or after 1 January 2019, with early application permitted. If adopted early, the entity must disclose its early adoption and application of these amendments.

The IASB has also published for public consultation an exposure draft of its Proposed IFRS Taxonomy Update, IFRS Taxonomy 2017-Prepayment Features with Negative Compensation. This includes taxonomy features for the new presentation and disclosure requirements included in the amendments to IFRS 9. The comment deadline is 11 December 2017.

Access to the amendments to IFRS 9 and IAS 28 is limited to subscribers of eIFRS Professional/Comprehensive. These amendments are available on this link.

The illustrative example is available on this link.

The Proposed Taxonomy Update is available on this link.

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