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Hi,
Just wondering what the scope of IFRS 9 is for the paper??
My resources go through IFRS 9 but given it is not effective till 2018, I assume I should focus on IAS 39 and classify financial assets and liabilities in line with IAS 39 ie. AFS, HTM, loans and receivables and financial assets at FVTPL and just reference IFRS 9 effective 1 Jan 2018. Is this correct? Think I am confused between past papers, resources and articles.
What standard is applicable for hedging also?
Thanks,
GrainneHi Grainne
IAS 39 IS NO LONGER IN THE SYLLABUS for September 2015!!!!!
It’s IFRS 9 from here on in
OK?
Hello,
On BPP Study Text for December 2015, on page 220 (6.5.2) example, the “85% – 125%” effectiveness test is still conducted.My understanding was that this test was no longer used under IFRS9.
Am I missing something?
Thanks,
CrisHere’s an extract from an article that compares IAS 39 with IFRS 9
Hope it helps!
“Testing hedge effectiveness
Testing the hedge effectiveness significantly simplified and came closer to the risk management needs.
IFRS 9 enables an entity to use information produced internally for risk management purposes and stopped forcing to perform complex analysis required only for accounting purposes.
IAS 39 requires testing hedge effectiveness both prospectively and retrospectively. A hedge is highly effective only if the offset is in the range of 80-125 percent. It means that if a company applies IAS 39, its accountants must perform numerical test of effectiveness – often these tests were performed solely in order to meet IAS 39 and for no other reason.
IFRS 9 outlines more principle-based criteria with no specific numerical thresholds. Namely, a hedge qualifies for hedge accounting if:
There is an economic relationship between the hedging instrument and the hedge item.
This relationship requires some judgment supported by a qualitative or a quantitative assessment of the economic relationship.
The effect of credit risk does not dominate the value changes that result from that economic relationship.
The hedge ration is designated based on actual quantities of hedged item and the hedging instrument.”
This is an extract from the site https://www.ifrsbox.com/hedge-accounting-ias39-ifrs9/
Hope it helps
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