IASB makes amendment in IFRS 9 and IAS 28

//IASB makes amendment in IFRS 9 and IAS 28

IASB makes amendment in IFRS 9 and IAS 28

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

The International Accounting Standards Board (IASB) has amended 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 will now amend IFRS 9, Financial Instruments, and International Accounting Standards (IAS) 28, Investments in Associates and Joint Ventures, respectively.

The scope of these amendments is quite narrow and basic purpose of the amendments is to address implementation issues. With the help of IFRS 9 amendments companies will now be permitted to measure particular pre-payable financial assets with so-called negative compensation at amortised cost or at fair value through other comprehensive income if a specified condition is met, instead of at fair value through profit or loss.

The IAS 28 amendments on the other hand clarifies 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 that demonstrates application of IFRS 9 and IAS 28 to long-term interests in an associate or joint venture. The example explains how an entity can apply IFRS 9 for the long-term interest and IAS 28 to its net investment in an associate. This 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 will be effective for accounting periods beginning on or after 1 January 2019, however, an early adoption is also permitted. In such a situation, the entity needs to 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 draft includes taxonomy features for the new presentation and disclosure requirements included in the amendments to IFRS 9. The deadline for comments is set as 11 December 2017.

By | 2017-10-30T00:57:59+00:00 October 30th, 2017|Categories: Accounting|Tags: |0 Comments

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