As the first phase of the IASB’s project to replace IAS 39, the classification and measurement component of IFRS 9 redefines when an entity is required to measure financial assets at fair value and whether those changes go through the income statement, other comprehensive income (OCI), or both. When it was first published in 2009, IFRS 9 required that all financial assets be measured at fair value through profit or loss, except a) those which give rise solely to interest and principal cash flows and are being held within a business model to hold assets in order to collect contractual cash flows, and b) investments in equity instruments which are designated by the entity as at fair value through OCI on initial recognition. In November 2012, the IASB proposed amendments to IFRS 9 which would, amongst other things, extend the fair value through OCI option to eligible debt instruments as well. The comments received on these proposals will be deliberated through the second, third and fourth quarters of 2013.
IFRS 9 will apply for years beginning on or after January 1, 2015. In addition to the items noted above, changes have also been made to the assessment of embedded derivatives, the option to measure an entity’s liabilities at fair value, and others.