International GAAP 2012: Generally Accepted Accounting Practice under International Financial Reporting Standards

Chapter 47

Financial instruments: Classification (IFRS 9)

1 Introduction

2 Classifying Financial Assets: an Overview

3 Classifying Financial Liabilities: an Overview

4 Financial Assets: The ‘Business Model’ Test

4.1 Applying the test to components of an entity

4.2 Impact of sales on the test

4.3 Financial assets (and financial liabilities) held for trading

4.4 Applying the business model test in practice

5 Financial Assets: The ‘Contractual Characteristics’ Test

5.1 Payments of principal and interest on the principal outstanding

5.2 Conventional subordination features

5.3 Non-recourse loans

5.4 Contractually linked instruments

5.4.1 Assessing the characteristics of the underlying pool

5.4.2 Assessing the exposure to credit risk in the tranche held

5.4.3 Date of assessment

6 Designation at Fair Value Through Profit or Loss

6.1 Designation eliminates or significantly reduces a measurement or recognition inconsistency (accounting mismatch) that would otherwise arise

6.2 A group of financial liabilities or financial assets and financial liabilities is managed and its performance is evaluated on a fair value basis

6.3 Financial liabilities containing embedded derivatives

7 Designation of Equity Investmensts at Fair Value Through Other Comprehensive Income

8 Reclassification of Financial Assets

9 Effective Date and Transition

9.1 Effective date

9.2 Transitional provisions

9.2.1 Date of initial application

9.2.2 Applying the ‘business model’ test

9.2.3 Applying the contractual characteristics ...