Commodity finance IFRS the 6 best examples

Commodity finance IFRS the 6 best examples – A key issue is whether the contract to deliver a non-financial item (the commodity) falls within the scope of IFRS 9 Financial Instruments. Although IFRS 9 would appear to apply only to financial assets and financial liabilities, certain contracts for non-financial items are also within its scope.

The scope of IFRS 9

In determining whether the transaction is within the scope of IFRS 9, key guidance is set out in IFRS 9 2.4. IFRS 9 2.4 notes that

This Standard shall be applied to those contracts to buy or sell a non-financial item that can be settled net in cash or in another financial instrument, or by exchanging financial instruments, Read more

11 Best fair value measurements under IFRS 13

11 Best fair value measurements under IFRS 13 – Several IFRS standards provide guidance regarding the scope and application of the fair value option for assets and liabilities. Here they are from 1 to 11…….

1 Investments in associates and joint ventures

Investments held by venture capital organizations and the like are exempt from IAS 28’s requirements only when they are measured at fair value through profit or loss in accordance with IFRS 9. Changes in the fair value of such investments are recognized in profit or loss in the period of change.

The IASB acknowledged that fair value information is often readily available in venture capital organizations and entities in similar industries, even for start-up and non-listed entities, as … Read more

IFRS 9 Financial instruments quick and best snapshot

IFRS 9 Financial instruments quick and best snapshot – no hedge accounting

Important to remember, where does IFRS 9 come from – the International Accounting Standards Board (IASB) developed if as a response to the financial crisis and it was issued on 24 July 2014. The standard includes the requirements previously issued and introduces limited amendments to the classification and measurement requirements for financial assets as well as the expected loss impairment model. It includes:

  • Classification and measurement of financial assets – principle-based, as opposed to rule-based, classification and measurement categories for financial assets;
  • Classification and measurement of financial liabilities – new requirements for handling changes in the fair value of an entity’s own debt, in order to address
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Hold to collect and sell

Under the 'hold to collect and sell’ business model, the objective is to both collect the contractual cash flows and sell the financial asset for cash

Held-to-maturity financial assets Example

Held-to-maturity financial assets example have passed the SPPI test and the business model test (Held to collect), measured at amortized cost and eff. interest

Offsetting

Offsetting - Identifying, recognising and measuring both an asset and a liability as separate units of account, but presenting them as a net asset or liability

Financial assets example

Financial assets example are a.o. loans and receivables, financial assets at fair value through profit or loss, derivatives designated as hedging instruments

Contingent liability

A contingent liability is a possible obligation that potentially arises from past events out of control of the entity or obligations not probable/measurable

Fair value option

Fair value option - There are two of them 1) the FV option for debt instruments and 2) the FVOCI option for equity instruments (not held for trading)