Wiley IFRS: Practical Implementation Guide and Workbook, 3rd Edition

Chapter 24

FINANCIAL INSTRUMENTS: RECOGNITION AND MEASUREMENT (IAS 39)

INTRODUCTION

IAS 39, Financial Instruments: Recognition and Measurement, addresses the accounting for financial assets and financial liabilities. More specifically, IAS 39 contains requirements for

• When a financial asset or financial liability should first be recognized in the statement of financial position

• When a financial asset or a financial liability should be derecognized (i.e., removed from the statement of financial position)

• How a financial asset or financial liability should be classified into one of the categories of financial assets or financial liabilities

• How a financial asset or financial liability should be measured, including

• When a financial asset or financial liability should be measured at cost, amortized cost, or fair value in the statement of financial position

• When to recognize and how to measure impairment of a financial asset or group of financial assets

• Special accounting rules for hedging relationships involving a financial asset or financial liability

• How a gain or loss on a financial asset or financial liability should be recognized either in profit or loss or in other comprehensive income

IAS 39 does not deal with presentation of issued financial instruments as liabilities or equity, nor does it deal with disclosures that entities should provide about financial instruments. Presentation issues are addressed in IAS 32, Financial Instruments: Presentation; disclosure issues ...