International GAAP 2013: Generally Accepted Accounting Principles under International Financial Reporting Standards

Chapter 48

Financial instruments: Recognition and initial measurement

1 Introduction

2 Recognition

2.1 General requirements

2.1.1 Receivables and payables

2.1.2 Firm commitments to purchase or sell goods or services

2.1.3 Forward contracts

2.1.4 Option contracts

2.1.5 Planned future transactions (forecast transactions)

2.1.6 Treatment by transferee of transfers of financial assets not qualifying for derecognition by transferor (symmetry of recognition and derecognition of transferred assets)

2.2 ‘Regular way’ transactions

2.2.1 Trade date accounting

2.2.2 Settlement date accounting

2.2.2.A Current market practice – ‘due date’ accounting

2.2.3 Illustrative examples

2.2.3.A Exchanges of non-cash financial assets

3 Initial measurement

3.1 General requirements

3.2 Initial fair value

3.2.1 Interest-free and low-interest long-term loans

3.2.2 Short-term receivables and payables

3.2.3 Liabilities with a demand feature

3.2.4 Measurement of financial instruments following modification of contractual terms that leads to initial recognition of a new instrument

3.2.5 Financial guarantee contracts and off-market loan commitments

3.2.6 ‘Day 1’ profits

3.2.7 Loans and receivables acquired in a business combination

3.3 Transaction costs

3.4 Bid-ask spreads

3.5 Embedded derivatives and financial instrument hosts

3.6 Regular way transactions

3.7 Assets and liabilities arising from loan commitments

4 Effective dates and transitional provisions

List of examples

Example 48.1: Trade date and settlement ...