ipsas 29—financial instruments: recognition and measurement - IFAC

FINANCIAL INSTRUMENTS: RECOGNITION AND MEASUREMENT
Appendix A paragraph AG116), until the financial asset is
derecognized, at which time the cumulative gain or loss previously
recognized in net assets/equity shall be recognized in surplus or deficit.
However, interest calculated using the effective interest method (see
paragraph 10) is recognized in surplus or deficit (see IPSAS 9).
Dividends or similar distributions on an available-for-sale equity
instrument are recognized in surplus or deficit when the entity’s right
to receive payment is established (see IPSAS 9).
65. For financial assets and financial liabilities carried at amortized cost (see
paragraphs 48 and 49), a gain or loss is recognized in surplus or deficit when
the financial asset or financial liability is derecognized or impaired, and
through the amortization process. However, for financial assets or financial
liabilities that are hedged items (see paragraphs 87–94 and Appendix A
paragraphs AG131–AG141) the accounting for the gain or loss shall follow
paragraphs 99–113.
66. If an entity recognizes financial assets using settlement date accounting (see
paragraph 40 and Appendix A paragraphs AG68 and AG71), any change in
the fair value of the asset to be received during the period between the trade
date and the settlement date is not recognized for assets carried at cost or
amortized cost (other than impairment losses). For assets carried at fair
value, however, the change in fair value shall be recognized in surplus or
deficit or in net assets/equity, as appropriate under paragraph 64.
Impairment and Uncollectibility of Financial Assets
67. An entity shall assess at the end of each reporting period whether there is any
objective evidence that a financial asset or group of financial assets is
impaired. If any such evidence exists, the entity shall apply paragraph 72 (for
financial assets carried at amortized cost), paragraph 75 (for financial assets
carried at cost) or paragraph 76 (for available-for-sale financial assets) to
determine the amount of any impairment loss.
68. A financial asset or a group of financial assets is impaired and impairment
losses are incurred if, and only if, there is objective evidence of impairment as a
result of one or more events that occurred after the initial recognition of the
asset (a “loss event”) and that loss event (or events) has an impact on the
estimated future cash flows of the financial asset or group of financial assets that
can be reliably estimated. It may not be possible to identify a single, discrete
event that caused the impairment. Rather the combined effect of several events
may have caused the impairment. Losses expected as a result of future events,
no matter how likely, are not recognized. Objective evidence that a financial
asset or group of assets is impaired includes observable data that comes to the
attention of the holder of the asset about the following loss events:
(a) Significant financial difficulty of the issuer or obligor;
IPSAS 29 1052