iGAAP Alert: December 2012
IASB issues proposals for limited amendments for IFRS 9
The most significant proposed change to IFRS 9 Financial Instruments is the introduction of a new category for classification of financial issues. The fair value through other components income (FVTOCI) measurement category would apply to financial assets that:
- contain contractual cash flows that are solely payments of principal and interest; and
- are managed as part of a business model whose objective is both to collect contractual cash flows and for sale.
This FVTOCI category would provide the same measurement outcome as the existing available for sale category under IAS 39 as applied to debt instruments, except a difference will arise when the impairment expected loss model is introduced, likely late 2013.
The amendments propose to permit an early adopter of IFRS 9 to early apply the requirement to recognise changes in own credit risk for certain financial liabilities in other comprehensive income without early adopting t he rest of the standard. The proposals also provide clarifications to the contractual cash flow assessment and the business model assessment when classifying debt instruments at amortised cost of FVTOCI.