Wiley International Trends in Financial Reporting under IFRS: Including Comparisons with US GAAP, Chinese GAAP, and Indian GAAP

CHAPTER 23

FINANCIAL INSTRUMENTS: RECOGNITION AND MEASUREMENT (IAS 39)

1. OBJECTIVE

1.1 The objective of this Standard is to establish principles for recognizing and measuring financial assets, financial liabilities, and some contracts to buy or sell nonfinancial items. The requirements for presentation and disclosure are covered by International Accounting Standard (IAS) 32, Financial Instruments: Presentation, and International Financial Reporting Standard (IFRS) 7, Financial Instruments: Disclosures, respectively.

1.2 This Standard does not apply to interest in subsidiaries (IAS 27, Consolidated and Separate Financial Statements), joint ventures (IAS 31, Interests in Joint Ventures), associates (IAS 28, Investments in Associates), employee benefit plans (IAS 19, Employee Benefits), share-based payments (IFRS 2, Share-Based Payment), insurance contracts (IFRS 4, Insurance Contracts) or contracts for contingent consideration in a business combination (IFRS 3, Business Combinations), own equity dealt with under IAS 32, or right to reimbursement covered under IAS 37, Provisions, Contingent Liabilities and Contingent Assets.

1.3 The classification and measurement provisions of this Standard are being replaced by IFRS 9, Financial Instruments (see Appendix A) effective January 1, 2015, with earlier application permitted. In the next two phases of replacing IAS 39 with IFRS 9, issues involving impairment methodology and hedge accounting will be replaced.

2. SYNOPSIS OF THE STANDARD ...