aCCOUNTING STANDARD AASB 2008-10
The Australian Accounting Standards Board makes Accounting
Standard AASB 2008-10 Amendments to Australian Accounting Standards –
Reclassification of Financial Assets under section 334 of the Corporations
Act 2001.
aCCOUNTING STANDARD AASB 2008-10
AMENDMENTS TO AUSTRALIAN ACCOUNTING STANDARDS –
reclassification of financial assets
Objective
1
The objective of this Standard is to make amendments to:
(a)
AASB 139 Financial Instruments: Recognition and Measurement; and
(b)
AASB 7 Financial Instruments: Disclosures;
as a consequence of the issuance of
Reclassification of Financial Assets (Amendments to IAS 39 Financial
Instruments: Recognition and Measurement and IFRS 7 Financial Instruments:
Disclosures) by the IASB in October
2008.
Application
2
This Standard applies to:
(a)
each entity that is required to prepare financial reports in accordance
with Part 2M.3 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.
3
The amendments to AASB 139 shall apply from 1 July 2008. An entity
shall not reclassify a financial asset in accordance with paragraph 50B,
50D or 50E before 1 July 2008. Any reclassification of a financial asset, in
accordance with paragraph 50B, 50D or 50E, made in periods beginning on or after 1 November 2008
shall take effect only from the date when the reclassification is made. Any
reclassification of a financial asset in accordance with paragraph 50B,
50D or 50E shall not be applied retrospectively to reporting periods ended
before the effective date set out in this paragraph.
4
The amendments to AASB 7 shall apply from 1 July 2008.
5
The requirements specified in this Standard apply to the financial statements
where information resulting from their application is material in accordance
with AASB 1031 Materiality.
Amendments to AASB 139
6
Paragraph 50 is amended to read as follows:
50 An entity:
(a) shall not reclassify a derivative out of the
fair value through profit or loss category while it is held or issued;
(b) shall not reclassify any financial instrument
out of the fair value through profit or loss category if upon initial
recognition it was designated by the entity as at fair value through profit or
loss; and
(c) may, if a financial asset is no longer held for
the purpose of selling or repurchasing it in the near term (notwithstanding
that the financial asset may have been acquired or incurred principally for the
purpose of selling or repurchasing it in the near term), reclassify that
financial asset out of the fair value through profit or loss category if the
requirements in paragraph 50B or 50D are met.
An entity shall not reclassify any financial instrument
into the fair value through profit or loss category after initial recognition.
7
Paragraphs 50B-50F are added after paragraph 50:
50B A financial asset to
which paragraph 50(c) applies (except a financial asset of the type
described in paragraph 50D) may be reclassified out of the fair value
through profit or loss category only in rare circumstances.
50C If an entity
reclassifies a financial asset out of the fair value through profit or loss
category in accordance with paragraph 50B, the financial asset shall be
reclassified at its fair value on the date of reclassification. Any gain or
loss already recognised in profit or loss shall not be reversed. The fair value
of the financial asset on the date of reclassification becomes its new cost or
amortised cost, as applicable.
50D A financial asset to
which paragraph 50(c) applies that would have met the definition of loans
and receivables (if the financial asset had not been required to be classified
as held for trading at initial recognition) may be reclassified out of the fair
value through profit or loss category if the entity has the intention and
ability to hold the financial asset for the foreseeable future or until maturity.
50E A financial asset
classified as available for sale that would have met the definition of loans
and receivables (if it had not been designated as available for sale) may be
reclassified out of the available-for-sale category to the loans and receivables
category if the entity has the intention and ability to hold the financial
asset for the foreseeable future or until maturity.
50F If an entity
reclassifies a financial asset out of the fair value through profit or loss
category in accordance with paragraph 50D or out of the available-for-sale
category in accordance with paragraph 50E, it shall reclassify the financial
asset at its fair value on the date of reclassification. For a financial asset
reclassified in accordance with paragraph 50D, any gain or loss already
recognised in profit or loss shall not be reversed. The fair value of the
financial asset on the date of reclassification becomes its new cost or
amortised cost, as applicable. For a financial asset reclassified out of the
available-for-sale category in accordance with paragraph 50E, any previous
gain or loss on that asset that has been recognised in other comprehensive
income in accordance with paragraph 55(b) shall be accounted for in
accordance with paragraph 54.
8
In the Application Guidance, paragraph AG8 is amended to read as
follows:
AG8 If an entity revises its estimates of payments or
receipts, the entity shall adjust the carrying amount of the financial asset or
financial liability (or group of financial instruments) to reflect actual and
revised estimated cash flows. The entity recalculates the carrying amount by
computing the present value of estimated future cash flows at the financial
instrument’s original effective interest rate. The adjustment is recognised as
income or expense in profit or loss. If a financial asset is reclassified in
accordance with paragraph 50B, 50D or 50E, and the entity subsequently
increases its estimates of future cash receipts as a result of increased
recoverability of those cash receipts, the effect of that increase shall be
recognised as an adjustment to the effective interest rate from the date of the
change in estimate rather than as an adjustment to the carrying amount of the
asset at the date of the change in estimate.
Amendments to AASB 7
9
Paragraph 12 is amended to read as follows:
12 If the entity has reclassified a financial
asset (in accordance with paragraphs 51-54 of AASB 139) as one measured:
(a) at cost or amortised cost, rather than fair
value; or
(b) at fair value, rather than at cost or amortised
cost,
it shall disclose the amount reclassified into and out of
each category and the reason for that reclassification.
10
Paragraph 12A is added:
12A If the entity has reclassified a financial asset
out of the fair value through profit or loss category in accordance with
paragraph 50B or 50D of AASB 139 or out of the available-for-sale
category in accordance with paragraph 50E of AASB 139, it shall disclose:
(a) the amount reclassified into and out of each
category;
(b) for each reporting period until derecognition,
the carrying amounts and fair values of all financial assets that have been
reclassified in the current and previous reporting periods;
(c) if a financial asset was reclassified in
accordance with paragraph 50B, the rare situation, and the facts and
circumstances indicating that the situation was rare;
(d) for the reporting period when the financial
asset was reclassified, the fair value gain or loss on the financial asset
recognised in profit or loss or other comprehensive income in that reporting
period and in the previous reporting period;
(e) for each reporting period following the
reclassification (including the reporting period in which the financial asset
was reclassified) until derecognition of the financial asset, the fair value gain
or loss that would have been recognised in profit or loss or other
comprehensive income if the financial asset had not been reclassified, and the
gain, loss, income and expense recognised in profit or loss; and
(f) the effective interest rate and estimated
amounts of cash flows the entity expects to recover, as at the date of
reclassification of the financial asset.