IFRS 9 Financial instruments: Practical view

Explore how IFRS 9 measures financial instruments using amortized cost and fair value, with the effective interest rate and credit impairment considerations, plus the IFRS 13 fair value hierarchy.

Understand initial recognition and measurement of financial instruments under IFRS 9, recognizing at transaction price with costs, and classify into fair value through P&L, amortized cost, or FVOCI.

Under IFRS 9, apply the eight percent market rate to discount the one-year loan to its present value of 1.8 million, recognizing a 148 thousand loss in the P&L.

Apply IFRS 9 to recognize an investment bought for 38,000 with 1% transaction costs, and adjust to fair value after one year; record a 6,000 sale profit.

Capitalizes transaction costs into the cost of investment, measures at fair value with changes to other comprehensive income, and recognizes sale gains in profit or loss.

Explore how IFRS 9 classifies financial assets by business model and cash flow characteristics, guiding amortized cost, fair value through other comprehensive income, or fair value through profit and loss.

Under IFRS 9, construct an amortization table for a $1.5 million bond issued at par, with a 4% coupon for two years and 6% thereafter, redeemed at par.

Learn how to amortize a bond with nominal value 40 million, purchase price 38 million, and coupon 8% using a 10% effective rate, with journal entries and redemption at par.

Explore IFRS 9 practical handling of a bond by building an amortization table, calculating interest, recording fair value adjustments through other comprehensive income, and redeeming at nominal value.

Explains selling an investment under IFRS 9, including 50 million sale price and 49.5 million fair value at end-2016, plus reclassifying 0.25 million from oci to p&l on disposal.

Explore IFRS 9 financial instruments through a practical bond example, applying initial, average, and end-year exchange rates, and recording entries under fair value through other comprehensive income.

Under IFRS 9, CatCo recognizes dividend income of 2 million in profit and loss and records fair value changes of the equity instrument in other comprehensive income.

Under IFRS 9, trading shares generate fair value changes in profit or loss, with dividend income recognized in P&L; year-end fair value is 56 million, and transaction costs are expensed.

Examine how changes in an entity's business model drive the reclassification of financial assets, with gains or losses at the classification date recognized in other components income.

Explain IFRS 9 reclassification from amortized cost to fair value through profit and loss, with 1000 carrying amount, 1050 fair value, and a 50 gain.

Derecognize financial assets under IFRS 9 by assessing whether contractual rights to cash flows have expired or risks and rewards have transferred, including partial transfers via tests.

We explain a $200k trade receivable sold 75% to a factor with no recourse, recognizing $150k cash and $50k remains on the seller’s books, minus a $10k service fee.

Analyzes accounting for a recourse factoring of trade receivables under IFRS 9, including upfront cash, continuing cash flow rights, and the 8000 service charge.

Explore IFRS 9 classification and measurement of financial liabilities, including amortized cost, fair value through profit or loss, designation to reduce accounting mismatch, and derivatives, with reclassification prohibited.

Describe how fair value through profit and loss treats changes in a financial liability, with own credit risk going to OCI and the remainder to P&L, highlighting potential accounting mismatch.

This lecture covers issuing ten thousand debentures at a two percent discount, a four percent coupon, and redemption at a five percent premium under amortized cost.

Describe how financial liability at face value decreases by twenty thousand, with five thousand due to own credit risk recognized in other comprehensive income and fifteen thousand profit or loss.

Explain derecognition of financial liabilities when discharged or expired, or after a substantial modification defined by a 10 percent present-value variance. Apply to practice questions on costs, amortization, and repurchase.

Compute carrying amount for a zero coupon bond by amortizing the 2% discount and 14k issue costs over six years, then compare to a 102 repurchase to reveal 14,800 loss.

Using IFRS 9, restructure debt by discounting at 12 percent to a new principal of 72,500, yielding a present value of 51,600 and a gain on restructuring of 42,910.

Apply the IFRS 9 debt restructuring to reduce India’s debt to 90,000, using a 3-year discount at 6% and 5% interest, yielding deferred gain of 12,407 amortized over three years.

An embedded derivative is a derivative within a host contract under IFRS 9 that can modify cash flows and be separated and measured at fair value through profit and loss.