IFRS 9: Accounting for Financial Instruments

Analyze how SPPI criteria determine amortized cost classification for financial assets by examining the cash flows of principal and interest and the common scenarios discussed.

Evaluate the SPPI test under IFRS 9 by analyzing scenarios of prepayment, cross-selling, interest rate changes, and varying recoveries to determine if cash flows represent solely principal and interest.

Explain the classification of financial assets under amortized cost and fair value through other comprehensive income, and show how fair value changes and irr influence accounting entries.

Explain IFRS 9 classification into amortized cost, fair value through other comprehensive income, and FVTPL, and show how entities irrevocably designate assets as FVTPL to avoid accounting mismatches.

Calculate the effective interest rate by discounting future cash flows to determine EIR for financial assets and liabilities, using present value and cash-flow timing.

Explore how convertible debt blends debt and potential equity under IFRS 9, with investors’ conversion options, their impact on liability vs equity classification, and pricing mechanics.

Learn to account for early redemption of convertible debt under IFRS 9, separating liability and equity components, measuring fair value with market rates, and recognizing premium impact.

Explore derecognition principles under IFRS 9, deciding when to recognize or remove financial assets like receivables, loans, and transfers such as securitizations from the books.

Identify derivatives as contracts with no intrinsic value. Their value shifts with underlying variables such as interest rates or exchange rates, creating a zero sum outcome for both parties.

Explore the meaning of derivatives, including contracts whose value depends on an underlying asset, minimal or no initial investment, and future settlement, with examples like forwards, swaps, and embedded derivatives.

Examine embedded derivatives in hybrid contracts under IFRS 9, and learn when to separate a derivative from host contract and account for it at fair value through profit and loss.

Explore hedge accounting for a european entity's foreign currency exposure using a forward contract, examining forward and spot movements, derivative value, and recognition in other comprehensive income or income statement.

Explore IFRS 9 cash flow hedge discontinuation, detailing when highly probable cash flows vanish, OCI retention, recycling, and reclassification to profit or loss.

Explore IFRS 9 hedging concepts, comparing cash flow hedges and fair value hedges against foreign currency risk. See a worked example with forward contracts, OCI, and inventory effects.

Learn how fair value hedge protects the value of assets, liabilities, or firm commitments by using derivatives like forwards, swaps, and options to reduce exposure to fair value changes.

Explore fair value hedging under IFRS 9, using a fixed-rate debt hedged by an interest-rate swap, with separate accounting and offsetting liability changes.

Apply fair value hedges to firm commitments to manage price risk in inventory purchases. Offset gains and losses through the forward contract and the firm commitment under IFRS 9.

Describe how cash flow hedge accounting under IFRS 9 uses OCI to accumulate gains and losses on a futures hedge until settlement, then adjust inventory cost accordingly.

In a cash flow hedge with no underlying non-financial asset, reclassify OCI gains and losses to the income statement as cash flows affect earnings, shown via a futures example.

Explain hedge accounting for a foreign currency exposure using a cash flow hedge with a forward contract, tracing spot and forward movements and their impact on OCI and inventory valuation.

Learn how IFRS 9 accounts for option hedges by separating intrinsic and time value, placing intrinsic value in the hedge reserve and recycling time value to revenue.

Explore how IFRS 9 recognizes impairment on day one for amortized cost financial assets, using 12-month and lifetime expected losses, with a simplified approach for trade receivables.

Explore IFRS 9 impairment of financial assets through a three-stage model, applying probability of default and rating transitions to determine 12-month and lifetime expected losses.

Explore impairment of trade receivables for non-financial entities under IFRS 9, comparing lifetime versus 12-month ECL, the significant financing component, and the simplified approach.

Analyze how IFRS 9 impairs financial assets by identifying significant changes in credit risk, moving from stage one with 12-month expected losses to stage two with lifetime losses.