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IFRS 9 - Financial Instruments

The final version of IFRS 9, issued in July 2014, is the IASB's replacement of IAS 39 Financial Instruments: Recognition and Measurement. The standard includes requirements for recognition and measurement of financial assets and liabilities, impairment of financial assets, derecognition and general hedge accounting

IFRS 9 – the new financial instrument accounting standard - was developed by the International Accounting Standards Board (IASB) as a response to the financial crisis and issued on 24 July 2014. The standard includes the requirements previously issued and introduces limited amendments to the classification and measurement requirements for financial assets as well as a new expected loss impairment model.

The scope of IFRS 9 encompasses all aspects of financial instruments accounting:
  • Classification and measurement of financial assets
  • Classification and measurement of financial liabilities
  • Impairment
  • Hedge accounting
IFRS 9 holds many advantages over its predecessor, IAS 39 Financial Instruments: Recognition and Measurement. The most notable of these are:
  • principle-based, as opposed to rule-based, classification and measurement categories for financial assets;
  • a single, forward-looking impairment model that will result in more timely recognition of impairment losses on financial assets;
  • new requirements for handling changes in the fair value of an entity’s own debt, in order to address the “own credit” issue; and
  • a new hedge accounting model that allows entities to better reflect their risk management activities.

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