IASB issues amendments to the classification and measurement requirements in IFRS 9

On 30 May 2024, the IASB issued Amendments to the Classification and Measurement of Financial Instruments - Amendments to IFRS 9 and IFRS 7 (the Amendments). The Amendments are in response to the matters identified during the post-implementation review of the classification and measurement requirements of IFRS 9 Financial Instruments.
The Amendments address the following:
  • The classification of financial assets:
    • The Amendments provide guidance on the assessment of whether contractual cash flows are consistent with a basic lending arrangement. This aspect of the Amendments is primarily to address stakeholder concerns on the classification of financial assets with environmental, social and corporate governance (ESG) and similar features.
    • Financial assets with non-recourse features: The Amendments clarify that a financial asset has non-recourse features if an entity’s ultimate right to receive cash flows is contractually limited to the cash flows generated by specified assets.
    • Contractually linked instruments: The Amendments clarify the characteristics of contractually linked instruments. The Amendments also clarify, with example, that some transactions that may contain multiple debt instruments and appear to have the characteristics of contractually linked instruments are in fact lending arrangements structured to provide enhanced credit protection to the creditor.
  • Derecognition of liabilities settled through electronic payment systems: When settling a financial liability in cash using an electronic payment system, the Amendments permit an entity to deem the financial liability to be discharged before the settlement date if it meets certain specified criteria.
  • Disclosures: The Amendments also amend IFRS 7 Financial Instruments: Disclosures to introduce disclosure requirements related to investments in equity instruments designated at fair value through other comprehensive income and contractual terms that could change the amount of contractual cash flows
The Amendments are effective for annual reporting periods beginning on or after 1 January 2026, with earlier application permitted. An entity is also permitted to early apply only the amendments related to classification of financial assets.
The Amendments may be accessed here.