European Commission Endorses Amendments to IFRS 9

Amendments to IFRS 9 Financial Instruments (Prepayment Features with Negative Compensation) has been endorsed by the European Union.

The Amendments, which are effective for periods beginning on or after 1 January 2019, change IFRS 9 for particular financial assets that would otherwise have contractual cash flows that are solely payments of principal and interest but do not meet the condition only as a result of a negative prepayment feature. Specifically, for a financial asset that contains a prepayment option that may result in the payment of a reasonable negative compensation amount, the Amendments require the financial asset to be measured at amortised cost or at fair value through other comprehensive income, subject to the assessment of the business model in which it is held.

The current endorsement status of all standards, amendments to standards, and interpretations issued by the IASB is available from the European Financial Reporting Advisory Group’s (EFRAG’s) web site here.