AASB IFRS Based Standard

1 AASB Standard AASB 9 December 2014 Financial Instruments AASB 9 2 COPYRIGHT Obtaining a Copy of this accounting Standard This Standard is available on the AASB website: Alternatively, printed copies of this Standard are available for purchase by contacting: The Customer Service Officer Australian accounting standards Board Level 7 600 Bourke Street Melbourne Victoria AUSTRALIA Postal address: PO Box 204 Collins Street West Victoria 8007 AUSTRALIA Phone: (03) 9617 7637 Fax: (03) 9617 7608 E-mail: Website: Other Enquiries Phone: (03) 9617 7600 Fax: (03) 9617 7608 E-mail: COPYRIGHT Commonwealth of Australia 2014 This AASB Standard contains IFRS Foundation copyright material. Reproduction within Australia in unaltered form (retaining this notice) is permitted for personal and non-commercial use subject to the inclusion of an acknowledgment of the source. Requests and enquiries concerning reproduction and rights for commercial purposes within Australia should be addressed to The Director of Finance and Administration, Australian accounting standards Board, PO Box 204, Collins Street West, Victoria 8007.

2 All existing rights in this material are reserved outside Australia. Reproduction outside Australia 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 Australia should be addressed to the IFRS Foundation at ISSN 1036-4803 AASB 9 3 CONTENTS CONTENTS PREFACE COMPARISON WITH IFRS 9 INTRODUCTION TO IFRS 9 (available on the AASB website) accounting Standard AASB 9 FINANCIAL INSTRUMENTS Paragraphs Chapter 1 Objective and application Commencement Chapter 2 Scope Chapter 3 Recognition and derecognition Initial recognition Regular way purchase or sale of financial assets Derecognition of financial assets Transfers that qualify for derecognition Transfers that do not qualify for derecognition Continuing involvement in transferred assets All transfers Derecognition of financial liabilities Chapter 4 Classification Classification of financial assets Option to designate a financial asset at fair value through profit or loss Classification of financial liabilities Option to designate a financial liability at fair value through profit or loss Embedded derivatives Hybrid contracts with financial asset hosts Other hybrid contracts Reclassification Chapter 5 Measurement Initial measurement Subsequent measurement of financial assets

3 AASB 9 4 CONTENTS Subsequent measurement of financial liabilities Amortised cost measurement Financial assets Impairment Recognition of expected credit losses Simplified approach for trade receivables, contract assets and lease receivables Measurement of expected losses Reclassification of financial assets Gains and losses Investments in equity instruments Liabilities designated as at fair value through profit or loss Assets measured at fair value through other comprehensive income Chapter 6 Hedge accounting Objectives and scope of hedge accounting Hedging instruments Qualifying instruments Designation of hedging instruments Hedged items Qualifying items Designation of hedged items Qualifying criteria for hedge accounting accounting for qualifying hedging relationships Fair value hedges Cash flow hedges Hedges of a net investment in a foreign operation accounting for the time value of options accounting for the forward element of forward contracts and foreign currency basis spreads of financial instruments Hedges of a group of items Eligibility of a group of items as the hedged

4 Item Designation of a component of a nominal amount Presentation Nil net positions AASB 9 5 CONTENTS Option to designate a credit exposure as measured at fair value through profit or loss Eligibility of credit exposures for designation at fair value through profit or loss accounting for credit exposures designated at fair value through profit or loss Chapter 7 Effective date and transition Effective date Transition Transition for classification and measurement (Chapters 4 and 5) Transition for hedge accounting (Chapter 6) Entities that have applied AASB 9 (December 2009) or AASB 9 (December 2010) early Appendices: A. Defined Terms Page 66 B. Application Guidance Page 74 DELETED IFRS 9 TEXT Page 207 IMPLEMENTATION GUIDANCE ON IFRS 9 (available on the AASB website) BASIS FOR CONCLUSIONS ON IFRS 9 (available on the AASB website) Australian accounting Standard AASB 9 Financial Instruments is set out in paragraphs and Appendices A and B.

5 All the paragraphs have equal authority. Paragraphs in bold type state the main principles. Terms defined in Appendix A are in italics the first time they appear in the Standard . AASB 9 is to be read in the context of other Australian accounting standards , including AASB 1048 Interpretation of standards , which identifies the Australian accounting Interpretations. In the absence of explicit guidance, AASB 108 accounting Policies, Changes in accounting Estimates and Errors provides a basis for selecting and applying accounting policies. AASB 9 6 PREFACE PREFACE Introduction The Australian accounting standards Board (AASB) makes Australian accounting standards , including Interpretations, to be applied by: (a) entities required by the Corporations Act 2001 to prepare financial reports; (b) governments in preparing financial statements for the whole of government and the General Government sector (GGS); and (c) entities in the private or public for-profit or not-for-profit sectors that are reporting entities or that prepare general purpose financial statements.

6 AASB 1053 Application of Tiers of Australian accounting standards establishes a differential reporting framework consisting of two tiers of reporting requirements for preparing general purpose financial statements: (a) Tier 1: Australian accounting standards ; and (b) Tier 2: Australian accounting standards Reduced Disclosure Requirements. Tier 1 requirements incorporate international Financial Reporting standards (IFRSs), including Interpretations, issued by the international accounting standards Board (IASB), with the addition of paragraphs on the applicability of each Standard in the Australian environment. Publicly accountable for-profit private sector entities are required to adopt Tier 1 requirements, and therefore are required to comply with IFRSs. Furthermore, other for-profit private sector entities complying with Tier 1 requirements will simultaneously comply with IFRSs. Some other entities complying with Tier 1 requirements will also simultaneously comply with IFRSs. Tier 2 requirements comprise the recognition and measurement requirements of Tier 1 but substantially reduced disclosure requirements in comparison with Tier 1.

7 Australian accounting standards also include requirements that are specific to Australian entities. These requirements may be located in Australian accounting standards that incorporate IFRSs or in other Australian accounting standards . In most instances, these requirements are either AASB 9 7 PREFACE restricted to the not-for-profit or public sectors or include additional disclosures that address domestic, regulatory or other issues. These requirements do not prevent publicly accountable for-profit private sector entities from complying with IFRSs. In developing requirements for public sector entities, the AASB considers the requirements of international public sector accounting standards (IPSASs), as issued by the international public sector accounting standards Board (IPSASB) of the international Federation of Accountants. AASB 9 8 COMPARISON COMPARISON WITH IFRS 9 AASB 9 Financial Instruments incorporates IFRS 9 Financial Instruments issued by the international accounting standards Board (IASB).

8 Paragraphs that have been added to this Standard (and do not appear in the text of IFRS 9) are identified with the prefix Aus , followed by the number of the preceding IASB paragraph and decimal numbering. Entities that comply with AASB 9 will simultaneously be in compliance with IFRS 9. AASB 9 9 Standard accounting Standard AASB 9 The Australian accounting standards Board makes accounting Standard AASB 9 Financial Instruments under section 334 of the Corporations Act 2001. Kris Peach Dated 17 December 2014 Chair AASB accounting Standard AASB 9 FINANCIAL INSTRUMENTS Chapter 1 Objective and application The objective of this Standard is to establish principles for the financial reporting of financial assets and financial liabilities that will present relevant and useful information to users of financial statements for their assessment of the amounts, timing and uncertainty of an entity s future cash flows. This Standard applies to: (a) each entity that is required to prepare financial reports in accordance with Part of the Corporations Act and that is a reporting entity; (b) general purpose financial statements of each other reporting entity; and (c) financial statements that are, or are held out to be, general purpose financial statements.

9 This Standard applies to annual reporting periods beginning on or after 1 January 2018. This Standard may be applied to reporting periods beginning after 24 July 2014 but before 1 January 2018. However, except as specified by paragraph , if an entity elects to apply this Standard early, it must disclose that fact and apply all of the requirements in this Standard at the same time (but see also paragraphs and of this Standard ). It shall also, at the same time, apply the amendments in AASB 2010-7 Amendments to Australian AASB 9 10 Standard accounting standards arising from AASB 9 (December 2010) (as amended), Part E of AASB 2014-1 Amendments to Australian accounting standards and AASB 2014-7 Amendments to Australian accounting standards arising from AASB 9 (December 2014). When applied or operative, this Standard supersedes AASB 9 Financial Instruments (December 2009, as amended) and AASB 9 Financial Instruments (December 2010, as amended). However, for annual reporting periods ending on or after 31 December 2009 that begin before 1 January 2018, an entity may elect to apply AASB 9 (December 2009) or AASB 9 (December 2010) instead of applying this Standard if, and only if, the entity s relevant date of initial application is before 1 February 2015, and except that AASB 9 (December 2010) may be applied early only as set out in that Standard .

10 When applied or operative, this Standard supersedes Interpretation 9 Reassessment of Embedded Derivatives, as identified in AASB 1048 Interpretation of standards . The requirements added to AASB 9 in December 2010 incorporate the requirements previously set out in paragraphs 5 and 7 of Interpretation 9. As a consequential amendment, AASB 1 First-time Adoption of Australian accounting standards incorporates the requirements previously set out in paragraph 8 of Interpretation 9. Commencement This Standard commences on the day this Standard is made by the Australian accounting standards Board. Chapter 2 Scope This Standard 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 AASB 10 Consolidated Financial Statements, AASB 127 Separate Financial Statements or AASB 128 Investments in Associates and Joint Ventures. However, in some cases, AASB 10, AASB 127 or AASB 128 require or permit an entity to account for an interest in a subsidiary, associate or joint venture in accordance with some or all of the requirements of this Standard .