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IASB Proposes Improvements to Financial Instruments Accounting
On 14 July 2009 the International Accounting Standards Board (IASB) published an exposure draft of proposals to improve financial instrument accounting. The IASB invites comments on the exposure draft by 14 September 2009.
Under the proposals if a financial instrument produces predictable cash flows such as a government bond or mortgage it would be valued at amortised cost. Other financial instruments such as derivatives would be measured at fair value. Entities would not be able to reclassify a financial instrument between the fair value and amortised cost categories.
This exposure draft will lead to amendments to IFRSs before the end of 2009. Two further amendments are planned which will address the impairment methodology and hedge accounting. The IASB plans to complete the replacement of IAS 39 during 2010, although mandatory application will not be before January 2012.