Hey IFRS experts,
I need some guidance regarding modification in financial liabilities under IFRS-9 where 10% rule does not meet. I have tried to use original IFRS but couldn't get any satisfactory result.
As per IFRS-9 paragraph 3.3.2, if modification in the financial liability is significant, we will extinguish the original liability and recognize the new one. Which means, if modification is not significant, we don't derecognize the existing liability. My question is then how do we account for that modification?
From the website of Grant Thornton, I was able to know that we will discount our new cashflows using our original effective interest and update our liability accordingly. However, I was unable to verify it from the official IFRS handbook. Can someone please give me a reference to the paragraph mentioning that treatment? Thanking you in advance!
IFRS-9: Modification/Derecognition of Financial Liabilities
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Muzammil Korai
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Re: IFRS-9: Modification/Derecognition of Financial Liabilities
Have a look at IFSR 9 5.4.3 and BC4.252-3
Cheers
Cheers
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Muzammil Korai
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Re: IFRS-9: Modification/Derecognition of Financial Liabilities
Sir, I think IFRS 9 paragraph 5.4.3 relates to the Financial assets, not financial liabilities. Please correct me if I am wrong
Last edited by Muzammil Korai on 07 Dec 2023, 10:48, edited 1 time in total.
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JakobLavrod
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Re: IFRS-9: Modification/Derecognition of Financial Liabilities
The Basis of Conclusion version I have end BC4 on BC4.215 (not sure if I have the right version however
)IFRS 9 Impairment Specialist
Risk Control at Svenska Handelsbanken
Risk Control at Svenska Handelsbanken
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Muzammil Korai
- Posts: 16
- Joined: 07 Dec 2023, 03:30
Re: IFRS-9: Modification/Derecognition of Financial Liabilities
@JakobLavrod. Can you help me identifying the source from original IFRS? Please!JakobLavrod wrote: ↑07 Dec 2023, 10:34 The Basis of Conclusion version I have end BC4 on BC4.215 (not sure if I have the right version however
Re: IFRS-9: Modification/Derecognition of Financial Liabilities
Hi Muzammil, the paragraphs I have I included above are the ones you should refer to
Re: IFRS-9: Modification/Derecognition of Financial Liabilities
You are right, but that's why you need to look at paragraphs BC4.252 and 253. The same logic applies to financial liabilities.Muzammil Korai wrote: ↑07 Dec 2023, 10:20Sir, I think IFRS 9 paragraph 5.4.3 relates to the Financial assets, not financial liabilities. Please correct me if I am wrong
Re: IFRS-9: Modification/Derecognition of Financial Liabilities
The right version, but probably a bit outdatedJakobLavrod wrote: ↑07 Dec 2023, 10:34 The Basis of Conclusion version I have end BC4 on BC4.215 (not sure if I have the right version however