Free Essay

Differences Between Ias 39 and Ias 9

In:

Submitted By chrismalperera
Words 965
Pages 4
5/6/2015

Salient differences between IAS 39 and IFRS 9 | Accounting For Investments

Accounting For Investments
Web site resources for the book 'Accounting for Investments' by R. Venkata Subramani
Home
Accounting Standards
I F R S
Indian Standards (AS)
US GAAP
Book­Volume­1
00 – Introduction
Chapter Arrangement
Foreword
Preface
Reviews
01 – Financial Instruments
02 – Trading – FVPL
03 – Available for Sale
04 – Transfer of Categories
05 – Derivatives Theory
06 – Index Futures
07 – Stock Futures
08 – Call Options
09 – Put Options
10 – Hedge Accounting
11 – Contract for Difference
12 – Short Selling
13 – ADR/GDR
14 – Disclosures
Book­Volume­2
02 – Fixed Income Securities – FVPL
News
Americas
Hedge Funds
India
Private Equity
Sub­prime crisis
Online Courses
Accounting Standards Courses
Financial Products
Related Books
Tutorials
Credit Default Swaps
Equity Shares
Indian Income Tax
Options
Videos
Subscribe

http://accountingforinvestments.com/salient­differences­between­ias­39­and­ifrs­9/

1/5

5/6/2015

Salient differences between IAS 39 and IFRS 9 | Accounting For Investments

Salient differences between IAS 39 and IFRS 9 by R. Venkata Subramani
On 12 November 2009, the International Accounting Standards Board (IASB) issued IFRS 9 Financial
Instruments.
Salient differences between IAS 39 and IFRS 9
Parameter

IAS 39

IFRS 9

Name

Financial Instruments:
Recognition and Measurement

Financial Instruments

Applicability

Currently effective

Effective from 1st Jan 2013 with early adoption permitted

Scope

All aspects of Financial assets & Financial Liabilities including hedge accounting

Only Financial assets included. Presently the standard does not include Financial liabilities, derecognition of financial instruments, impairment and hedge accounting Classification of debt instruments

Fair Value Through Profit & Loss
(FVPL)

Fair Value Through Profit & Loss
(FVPL)

Available­for­sale (AFS)

Amortised Cost (AC)

Held­to­maturity (HTM)
Loan and Receivable (LAR)
Classification
of equity instruments Fair Value Through Profit
& Loss (FVPL)

Basis of classification Intention to hold till maturity, trading for short term profits, derivative, loan or receivable, or intentional designation subject to certain restrictions Available­for­sale (AFS)

http://accountingforinvestments.com/salient­differences­between­ias­39­and­ifrs­9/

Fair Value Through
Profit & Loss (FVPL)

Fair Value Through Other
Comprehensive Income (FVOCI)
Classification based on business model and the contractual cash flow characteristics 2/5

5/6/2015

Measurement
– Debt Instruments

Salient differences between IAS 39 and IFRS 9 | Accounting For Investments

Measured at amortised cost if classified as held­to­maturity or as loan or receivable.

Other classifications are measured at fair value.

Measured at amortised cost (AC) if business model objective is to collect the contractual cash flows and the contractual cash flows represent solely payment of principal and interest on the principal amount outstanding.

Debt instruments meeting the above criteria can still be measured at fair value through profit or loss (FVPL) if such designation would eliminate or reduce accounting mismatch.
If not, measured at fair value through profit or loss (FVPL)

Measurement
– Equity
Instruments

Measured at fair value.

Embedded derivatives Embedded derivatives are separated from the hybrid contract and are measured at FVPL.

No bifurcation of asset.

Fair value option

An entity can designate a financial asset to be measured at fair value on initial recognition.

The entity has the freedom to do so and need not satisfy any other criteria

A financial asset can be designated as
FVPL on initial recognition only if that designation eliminates or significantly reduces an accounting mismatch had the financial asset been measured at amortised cost. Reclassification between the various four categories allowed under specific circumstances with the

If entity’s business model objective changes, reclassification is permitted between FVPL and AC or vice versa.

Reclassifications
– Debt instruments

Exception: Unquoted equity investments are measured at cost where fair valuation is not sufficiently reliable.

http://accountingforinvestments.com/salient­differences­between­ias­39­and­ifrs­9/

Measured at fair value through profit or loss. An entity can irrevocably designate at initial recognition as fair value through other comprehensive income, provided the equity investment is not held for trading.

The financial asset is assessed in its entirety as to the contractual cash flows and if any of its cash flows do not represent either payments of principal or interest then the whole asset is measured at FVPL.

3/5

5/6/2015

Salient differences between IAS 39 and IFRS 9 | Accounting For Investments

gain/loss being treated differently depending upon the movement between the classifications.

Such changes should be demonstrable to external parties and are expected to be very infrequent.

Reclassification from held­to­ maturity (HTM) is viewed seriously if does not fall within the permitted exceptions. Reclassifications
– Equity instruments Reclassification is permitted between the FVPL and AFS.

When transferred from AFS to
FVPL, unrealized gain/loss is recognized in P&L based on fair value.
When transferred from FVPL to AFS, no reversal of gain/loss recognized as unrealized is permitted. However all gain/loss on disposal of AFS are recognized in P&L by transfer from equity.

Reclassification between FVPL and
FVOCI not permitted as FVOCI classification is done at the irrevocable designation of the entity as such. Only dividend income is recognized in P&L of assets designated as FVOCI.
Even on disposal of such assets, the gain/loss is not transferred from equity, but remains permanently in equity.

Be Sociable, Share!

Tweet

1

Like

21

1

Share

1

StumbleUpon

Leave a Comment
Name *
E­mail *
Website

http://accountingforinvestments.com/salient­differences­between­ias­39­and­ifrs­9/

4/5

5/6/2015

Salient differences between IAS 39 and IFRS 9 | Accounting For Investments

Submit

CAPTCHA Code *
Previous post: Wiley GAAP, CD­ROM and Book: Interpretation and Application of Generally Accepted
Accounting Principles 2009 (Wiley Gaap (Book & CD­Rom)) (Paperback)
Next post: New online course on IFRS 9: Financial Instruments

Amazon.com
Amazon.com
Get smart with the Thesis WordPress Theme from DIYthemes.

http://accountingforinvestments.com/salient­differences­between­ias­39­and­ifrs­9/

5/5

Diff

Similar Documents

Premium Essay

Financial Assessments

...date back to 2009 and 2010. Both of those companies are traded on the Frankfurt Stock Exchange and since 2006, they have been using IAS 39 for the recognition and measurement of their financials instruments. Furthermore, KPMG AG audited BMW’s 2009 financial statements on February 26, 2010, and BMW’s 2010 financial statements on February 25, 2011. Furthermore, KPMG AG audited Daimler AG’s 2009 financial statements on March 1, 2010, and the company’s 2010 financial statements on February 28, 2011. The purpose of this report is to examine the differences in numbers, and disclosures concerning the reporting of items under IAS 39, between and within the two companies, for 2009 and 2010. Further, this report will examine the controversies which have led to the establishment of IAS 39 fair market value procedures, and will investigate the differences between the reporting under IAS 39 (Fair value procedures), and its equivalent under US GAAP, SFAS 157. “The introduction of IAS 39 was aimed at bringing more visibility to financial statements users with regard to the accounting and disclosure of financial instruments (journal), especially derivatives, since prior to the enactement of IAS39, “derivatives were recorded as off balance sheet items, and were only disclosed in the notes of financial statements.”(journal ). One substantial change that IAS 39 has brought to IFRS reporting, is the great use of fair value measurements. “Fair value...

Words: 1237 - Pages: 5

Premium Essay

Fair Value - Ifr 13

...guidance under IFRS for all fair value measurements. After searching relevant sources from financial books and economic websites, some of the issues about fair value accounting have been clarified and analysed. This assignment provides a better understanding of the joint work between IASB and FASB, the definition of fair value under both standards, the relevant issue about IFRS 13 and why accounting differences exist. A. Explain the purpose of the Memorandum of Understanding between the IASB and the US national standard-setter, the Financial Accounting Standards Board (FASB). Theoretically, A Memorandum of Understanding is a document that involved a bilateral or multilateral agreement between parties (Wikipedia 2011). In this particular research essay, the Memorandum of Understanding is a convergence process that both the International Accounting Standard Board (IASB) and US national standard-setter, the Financial Accounting Standards Accounting (FASB) would take steps to balanced the reciprocal structural changes (Aicpa 2006). The purpose of this Memorandum of Understanding is to establish a collaborative, working relationship between the IASB and FASB, which (1) eliminate the differences between two standards that are in need of significant enhancement which is not the best use of the FASB’s and IASB’s resources; (2) integrate their commitment to the development of high...

Words: 3705 - Pages: 15

Premium Essay

Docx, Pdf, Doc

...Instruments: Disclosures This IAS contains amendments resulting from the adoption of Commission Regulations (EC) No. 2238/2004 of 29 December 2004 , Nr. 2237/2004 of 29 December 2004, No. 2236/2004 of 29 December 2004 and No. 108/2006 of 11 January 2006. Objective 1. The objective of this IFRS is to require entities to provide disclosures in their financial statements that enable users to evaluate: (a) the significance of financial instruments for the entity’s financial position and performance; and (b) the nature and extent of risks arising from financial instruments to which the entity is exposed during the period and at the reporting date, and how the entity manages those risks. 2. The principles in this IFRS complement the principles for recognising, measuring and presenting financial assets and financial liabilities in IAS 32 Financial Instruments: Presentation and IAS 39 Financial Instruments: Recognition and Measurement. Scope 3. This IFRS shall be applied by all entities to all types of financial instruments, except: (a) those interests in subsidiaries, associates and joint ventures that are accounted for in accordance with IAS 27 Consolidated and Separate Financial Statements, IAS 28 Investments in Associates or IAS 31 Interests in Joint Ventures. However, in some cases, IAS 27, IAS 28 or IAS 31 permits an entity to account for an interest in a subsidiary, associate or joint venture using IAS 39; in those cases, entities shall...

Words: 7983 - Pages: 32

Free Essay

Different Treat of Foreign Currency Transaction Between Gaap and Ias

...Objective of IAS 21 The objective of IAS 21 is to prescribe how to include foreign currency transactions and foreign operations in the financial statements of an entity and how to translate financial statements into a presentation currency. [IAS 21.1] The principal issues are which exchange rate(s) to use and how to report the effects of changes in exchange rates in the financial statements. [IAS 21.2] (IASPlus, Deloitte) Key definitions [IAS 21.8] -Functional currency: the currency of the primary economic environment in which the entity operates. (The term 'functional currency' was used in the 2003 revision of IAS 21 in place of 'measurement currency' but with essentially the same meaning.) -Presentation currency: the currency in which financial statements are presented. Exchange difference: the difference resulting from translating a given number of units of one currency into another currency at different exchange rates. -Foreign operation: a subsidiary, associate, joint venture, or branch whose activities are based in a country or currency other than that of the reporting entity. (IASPlus, Deloitte) An entity considers the following factors in determining its functional currency: (a) The currency: (i) that mainly influences sales prices for goods and services (this will often be the currency in which sales prices for its goods and services are denominated and settled); and (ii) of the country whose competitive forces and regulations mainly determine the sales...

Words: 2082 - Pages: 9

Premium Essay

Accounting

...crucial Q&A for decision-makers Guide aimed at finance directors, financial controllers and deal-makers, providing background to the standard, impact on the financial statements and controls, and summary differences with US GAAP. IFRS disclosure checklist 2008 Outlines the disclosures required by all IFRSs published up to October 2008. A practical guide to new IFRSs for 2009 40-page guide providing high-level outline of the key requirements of new IFRSs effective in 2009, in question and answer format. A practical guide to capitalisation of borrowing costs Guidance in question and answer format addressing the challenges of applyiing IAS 23R, including how to treat specific versus general borrowings, when to start capitalisation and whether the scope exemptions are mandatory or optional. A practical guide to segment reporting Provides an overview of the key requirements of IFRS 8, ‘Operating Segments’ and some points to consider as entities prepare for the application of this standard for the first time. Includes a question and answer section. Also available: Eight-page flyer on high level management issues. A practical guide to share-based payments Answers the questions we have been asked by entities and includes practical examples to help management draw similarities between the requirements in the standard and their own share-based payment arrangements. November 2008. Adopting IFRS – A...

Words: 6655 - Pages: 27

Premium Essay

Research Paper

...the paper, I will discuss this question based on some previous finding. Next, I will use IFRS 9 as a specific case for my conclusion. Finally, I will give my opinion on the effect of mandatory IFRS adoption on earning management. Key Words: Accounting Standard, earning management, IFRS, Financial Instrument, bank, impairment of asset, IAS39, IFRS 9 I. The effect of mandatory IFRS adoption on earning management 1.1 In 2012, Yi Lin Chua, Chee Seng Cheong. And Graeme Gould publish a article named “The Impact of Mandatory IFRS Adoption on Accounting Quality: Evidence form Australis. This article examines the impact of IFRS on accounting quality by focusing on threes perspectives: (1) earning management, (2) timely loss recognition, and (3) value relevance. In my paper, I will focus on earning management. First, the author talk about the reason he choose Australia. Because Australia is one of the first countries located outside of the EU that has mandated IFRS and is also the first non-EU adopting country that had fully prohibited an early adopting of IFRS prior to the 2005 mandate. After that, the article propose the three research hypotheses: HI: Earnings management has changed following the mandatory adoption of IFRS in Australia. H2: Timely loss recognition has changed following the mandatory adoption of IFRS in Australia. H3: The degree of association between accounting data and...

Words: 2776 - Pages: 12

Premium Essay

Securitisation

...filenote is to outline the accounting treatment associated with the receivables securitisation arrangement with Westpac. Introduction AASB 9's requirements on de-recognition are complex and require interpretation in a number of areas. Factoring arrangements are often referred to as "with recourse" or "without recourse". In a "with recourse" arrangement, all or most of the credit risk remains with the entity. Such an arrangement will almost always fail the risks and rewards tests (and possibly others). It should therefore be accounted for as a loan. By contrast, a "without recourse" arrangement transfers all or most of the credit risk to the factor (transferee). Such an arrangement is likely to qualify for de-recognition (subject to an evaluation of other risks that might be relevant such as slow payment risk). In substance, such an arrangement could be economically similar to a sale of the receivables in which case it is accounted for accordingly. The continuing involvement accounting requirements of IAS 39 will rarely apply in most factoring arrangements because most arrangements result in substantially all the risks and rewards being either transferred or retained. These requirements include special rules on recording and measuring continuing involvement assets and liabilities that deviate from the normal requirements of IAS 39. Accounting Implications When an entity factors its trade receivables, an analysis should be carried out to determine whether or not the...

Words: 2996 - Pages: 12

Premium Essay

Ifrs

...The Road to IFRS in India A practical guide to IFRS 1 and first-time adoption The Road to IFRS in India - A practical guide to IFRS 1 and first-time adoption 2 Introduction The Road to IFRS International Financial Reporting Standards (IFRS) is fast becoming the global accounting language. Over 100 countries have now adopted IFRS and many more have committed to make the transition in the next few years. The benefits of global standards are widely acknowledged. For companies, however, the conversion to IFRS is a major change both for the finance function and for the wider business. The International Accounting Standards Board (IASB) has recognised the need for guidance. In 2003 it published IFRS 1 First-time adoption of International Financial Reporting Standards (IFRS 1). IFRS 1 covers the application of IFRS in a company's first IFRS financial statements. It starts with the basic premise that an entity applies IFRS for the first time on a fully retrospective basis. However, acknowledging the cost and complexity of that approach, it then establishes various exemptions in areas where retrospective application would be too burdensome or impractical. IFRS convergence in India India is one of the largest jurisdictions that is currently going through the process of convergence with IFRS. Considering the diversity and complexity amongst Indian Companies that will transition to IFRS reporting, the Ministry of Corporate Affairs (MCA) has announced a roadmap which requires...

Words: 38884 - Pages: 156

Premium Essay

Paper

...of Hong Kong Financial Reporting Standards outside of Hong Kong in unaltered form (retaining this notice) is permitted for personal and non-commercial use only. Further information and requests for authorisation to reproduce for commercial purposes outside Hong Kong should be addressed to the IFRS Foundation at www.ifrs.org. Further details of the copyright notice form IFRS Foundation is available at http://app1.hkicpa.org.hk/ebook/copyright-notice.pdf © Copyright 2 HKAS 21 (July 2012May 2014) CONTENTS from paragraph INTRODUCTION IN1 HONG KONG ACCOUNTING STANDARD 21 THE EFFECTS OF CHANGES IN FOREIGN EXCHANGE RATES OBJECTIVE 1 SCOPE 3 DEFINITIONS 8 Elaboration on the definitions 9 Functional currency 9 Net investment in a foreign operation 15 Monetary items 16 SUMMARY OF THE APPROACH REQUIRED BY THIS STANDARD 17 REPORTING FOREIGN CURRENCY TRANSACTIONS IN THE FUNCTIONAL CURRENCY 20 Initial recognition 20 Reporting at the ends...

Words: 12583 - Pages: 51

Premium Essay

The Effect of Culture on the Implementation of International Financial Reporting Standards

...Claremont Colleges Scholarship @ Claremont CMC Senior Theses CMC Student Scholarship 2011 The Effect of Culture on the Implementation of International Financial Reporting Standards Mitchell A. Skotarczyk Claremont McKenna College Recommended Citation Skotarczyk, Mitchell A., "The Effect of Culture on the Implementation of International Financial Reporting Standards" (2011). CMC Senior Theses. Paper 165. http://scholarship.claremont.edu/cmc_theses/165 This Open Access Senior Thesis is brought to you by Scholarship@Claremont. It has been accepted for inclusion in this collection by an authorized administrator. For more information, please contact scholarship@cuc.claremont.edu. CLAREMONT McKENNA COLLEGE THE EFFECT OF CULTURE ON THE IMPLEMENTATION OF INTERNATIONAL FINANCIAL REPORTING STANDARDS SUBMITTED TO PROFESSOR MARC MASSOUD AND DEAN GREGORY HESS BY MITCHELL SKOTARCZYK FOR SENIOR THESIS SPRING 2011 2 Table of Contents I. Introduction…………………….……………………………………………………………….4 II. Literature Summary………………………………………...………………...….……………..5 III. IFRS……………………...……………………………………………………..……………11 IV. Carve-outs…………………………………………………………………………………....18 V. Culture and Accounting………………………………………………………………………25 VI. Conclusion………………………………………………………………...…………………30 Appendix………………………………………………………………………………………...32 Bibliography……………………………………………………………………………………..37 3 I. Introduction As globalization increases at a blistering pace, more...

Words: 9884 - Pages: 40

Premium Essay

Us Gaap vs Ifrs

...Comparison between U.S. GAAP and International Financial Reporting Standards May 2013 © 2013 Grant Thornton LLP All rights reserved U.S. member firm of Grant Thornton International Ltd Comparison between U.S. GAAP and International Financial Reporting Standards 2 Contents 1. Introduction .................................................................................................................................................. 6 International standards and the IASB ............................................................................................................ 6 Financial accounting and reporting in the United States ................................................................................ 6 IFRS and U.S. GAAP comparison ................................................................................................................. 6 Overall financial statement presentation ................................................................................................... 8 General .......................................................................................................................................................... 8 Statement of financial position / balance sheet .............................................................................................. 9 Statement of comprehensive income / income statement ........................................................................... 12 Statement of changes in equity...

Words: 95644 - Pages: 383

Premium Essay

A Practical Guide to Accounting for Agricultural Assets ()

...IFRS recognition and measurement requirements. Including currencies, assets, liabilities, equity, income, expenses, business combinations and interim financial statements. IFRS news A practical guide to capitalisation of borrowing costs Monthly newsletter focusing on the business implications of the IASB’s proposals and new standards. Subscribe by emailing corporatereporting@uk.pwc.com. Guidance in question and answer format addressing the challenges of applying IAS 23R, including how to treat specific versus general borrowings, when to start capitalisation and whether the scope exemptions are mandatory or optional. Illustrative interim financial information for existing preparers A practical guide to new IFRSs for 2009 40-page guide providing high-level outline of the key requirements of new IFRSs effective in 2009, in question and answer format. Illustrative information, prepared in accordance with IAS 34, for a fictional existing IFRS preparer. Includes a disclosure checklist and IAS 34 application guidance. Reflects standards issued up to 31 March 2009. Illustrative IFRS corporate consolidated financial statements for 2009 year ends A practical guide to segment...

Words: 8300 - Pages: 34

Premium Essay

International Accounting Standards and Accounting Quality

...University Accounting Research Conference, the 2005 Joint Journal of Accounting ResearchLondon Business School Conference on International Financial Reporting Standards, the 2006 New York University International Accounting Convergence and Capital Markets Integration Conference; research assistance of Yang Gui, Yaniv Konchitchki, and Christopher Williams; and funding from the Center for Finance and Accounting Research, Kenan-Flagler Business School. International Accounting Standards and Accounting Quality Abstract We examine whether application of International Accounting Standards is associated with higher accounting quality. The application of IAS reflects the combined effects of features of the financial reporting system, including standards, their interpretation, enforcement, and litigation. We find that firms applying IAS from 21 countries generally evidence less earnings management, more timely loss recognition, and more value...

Words: 16510 - Pages: 67

Premium Essay

A Practical Guide to Accounting for Agricultural Assets ()

...IFRS recognition and measurement requirements. Including currencies, assets, liabilities, equity, income, expenses, business combinations and interim financial statements. IFRS news A practical guide to capitalisation of borrowing costs Monthly newsletter focusing on the business implications of the IASB’s proposals and new standards. Subscribe by emailing corporatereporting@uk.pwc.com. Guidance in question and answer format addressing the challenges of applying IAS 23R, including how to treat specific versus general borrowings, when to start capitalisation and whether the scope exemptions are mandatory or optional. Illustrative interim financial information for existing preparers A practical guide to new IFRSs for 2009 40-page guide providing high-level outline of the key requirements of new IFRSs effective in 2009, in question and answer format. Illustrative information, prepared in accordance with IAS 34, for a fictional existing IFRS preparer. Includes a disclosure checklist and IAS 34 application guidance. Reflects standards issued up to 31 March 2009. Illustrative IFRS corporate consolidated financial statements for 2009 year ends A practical guide to segment...

Words: 8300 - Pages: 34

Premium Essay

Gaap vs Ifrs

...Work Plan for the Consideration of Incorporating International Financial Reporting Standards into the Financial Reporting System for U.S. Issuers A Comparison of U.S. GAAP and IFRS A Securities and Exchange Commission Staff Paper November 16, 2011 OFFICE OF THE CHIEF ACCOUNTANT UNITED STATES SECURITIES AND EXCHANGE COMMISSION This is a paper by the Staff of the U.S. Securities and Exchange Commission. The Commission has expressed no view regarding the analysis, findings, or conclusions contained herein. TABLE OF CONTENTS I.  II.  Introduction..........................................................................................................................1   Methodology ........................................................................................................................2   A.  Scope of the Analysis...............................................................................................2   B.  MoU and Other Joint Projects..................................................................................3   C.  SEC Rules and Regulations .....................................................................................8   D.  General Observations and Clarifications .................................................................8   Comparison of Requirements ............................................................................................11   A.  Accounting Changes and Error Corrections...

Words: 24926 - Pages: 100