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IASB proposes to amend IFRS 9 in relation to prepayment features with negative compensation

IFRS News | 18 May 2017

This edition outlines the proposed amendments to IFRS 9 Financial Instruments set out in the recent Exposure Draft (ED) 2017/3 issued by the International Accounting Standards Board (‘IASB’).

The IASB is remedying an unintended consequence to the notion of ‘reasonable additional compensation’. The IASB is proposing a narrow-scope amendment to IFRS 9 to allow financial assets with a prepayment option that could result in the option holder’s receiving compensation for early termination to be measured at amortised cost if certain criteria are met.

Proposed effective date: 1 January 2018.

The 30-day comment period ends on 24 May 2017.

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