What do you need to know about IAS 39?

IAS 39 is far-reaching – its requirements extend to virtually every area of business. Its application may require changes to systems, processes and documentation and, in some cases, to the way companies view and manage risk. It also requires companies to communicate their results in a new way.

What are two classes of financial liabilities in IAS 39?

IAS 39 recognises two classes of financial liabilities: [IAS 39.47] Financial liabilities at fair value through profit or loss Other financial liabilities measured at amortised cost using the effective interest method

When are loan commitments outside the scope of IAS 39?

Loan commitments are outside the scope of IAS 39 if they cannot be settled net in cash or another financial instrument, they are not designated as financial liabilities at fair value through profit or loss, and the entity does not have a past practice of selling the loans that resulted from the commitment shortly after origination.

When did IFRS 9 replace IAS 39 accounting standards?

The International Accounting Standards Board (IASB) published the final version of IFRS 9 Financial Instruments in July 2014. IFRS 9 replaces IAS 39 Financial Instruments: Recognition and Measurement, and is effective for annual periods beginning on or after January 1, 2018. Earlier application is permitted.

IAS 39 requires a positive intent and ability to hold a financial asset to maturity. In order to be classified as held-to-maturity, a financial asset must also be quoted in an active market. This fact distinguishes held-to-maturity investments from loans and receivables.

When is a non financial contract within the scope of IAS 39?

Contracts to buy or sell non-financial items are within the scope of IAS 39 if they can be settled net in cash or another financial asset and are not entered into and held for the purpose of the receipt or delivery of a non-financial item in accordance with the entity’s expected purchase, sale, or usage requirements.