The Accounting Standards Board (AcSB) is participating in the International Accounting Standards Board’s (IASB) annual improvements 2018-2020 cycle, to produce a collection of unrelated minor amendments to IFRS® Standards.
Upon modification or exchange of a financial liability, IFRS 9 Financial Instruments specifies a quantitative “10 per cent” test. This test assesses whether the new contractual terms between the borrower and the lender are substantially different from the original contractual terms, in determining whether the original financial liability should be derecognised.
The objective of this improvement is to clarify which fees and costs a company includes in this “10 per cent” test.
The AcSB’s due process includes ensuring that Canadian entities’ financial reporting needs are considered by the IASB, and issuing the AcSB’s own exposure draft on each IASB proposal. After considering the responses to the AcSB’s exposure draft and the relevance of the IASB’s proposals to the Canadian market, the AcSB expects that the amendments will be incorporated into Canadian GAAP in accordance with the AcSB’s strategy of adopting IFRS Standards for publicly accountable enterprises.