PBE IPSAS 41

PUBLIC BENEFIT ENTITY INTERNATIONAL PUBLIC SECTOR ACCOUNTING STANDARD 41 FINANCIAL INSTRUMENTS (PBE IPSAS 41)PBE IPSAS 41 FINANCIAL INSTRUMENTS PBE IPSAS 41 FINANCIAL INSTRUMENTS Objective Scope Definitions Recognition and Derecognition Classification Measurement Hedge Accounting Designation of Hedging Instruments Designation of Hedged Items Accounting for the Time Value of Options Accounting for the Forward Element of Forward Contracts and Foreign Currency Basis Spreads of Financial Instruments Designation of a Component of a Nominal Amount Presentation Nil Net Positions Accounting for Credit Exposures Designated at Fair Value Through Surplus or Deficit Highly Probable Requirement for Cash Flow Hedges Reclassifying the Amount Accumulated in the Cash Flow Hedge Reserve Assessing the Economic Relationship Between the Hedged Item and the Hedging Instrument Designating a Component of an Item as a Hedged Item End of Application Groups of Items Designation of Risk Components Effective Date and Transition Entities Transitioning from PBE IFRS 9 Entities Transitioning from PBE IPSAS 29 Impairment Scope Definitions Recognition and Derecognition Regular Way Purchase or Sale of Financial Assets Transfers that Qualify for Derecognition Transfers that do not Qualify for Derecognition Sale of Future Flows Arising from a Sovereign Right Continuing Involvement in Transferred Assets All Transfers Examples Classification The Entity’s Management Model for Financial Assets Contractual Cash Flows That are Solely Payments of Principal and Interest on the Principal Amount Outstanding Designation Eliminates or Significantly Reduces an Accounting Mismatch A Group of Financial Liabilities or Financial Assets and Financial Liabilities is Managed and its Performance is Evaluated on a Fair Value Basis Instruments Containing Embedded Derivatives Reassessment of Embedded Derivatives Reclassification of Financial Assets Measurement Initial Measurement of Financial Assets and Financial Liabilities (paragraphs 57–59)Concessionary Loans Equity Instruments Arising from Non-Exchange Transactions Valuing Financial Guarantees Issued Through a Non-Exchange Transaction Investments in Equity Instruments and Contracts on Those Investments Fair Value Measurement Considerations Active Market: Quoted Price No Active Market: Valuation Technique Inputs to Valuation Techniques Effective Interest Method Transaction Costs Write-off Collective and Individual Assessment Basis Timing of Recognising Lifetime Expected Credit Losses Determining Whether Credit Risk has Increased Significantly since Initial Recognition Modifications Expected Credit Losses Definition of Default Period over Which to Estimate Expected Credit Losses Probability-weighted Outcome Time Value of Money Reasonable and Supportable Information Collateral Liabilities Designated as at Fair Value Through Surplus or Deficit Designation of Hedging Instruments Qualifying Items Designation of Hedged Items Hedge Effectiveness Economic Relationship Between the Hedged Item and the Hedging Instrument The Effect of Credit Risk Hedge Ratio Frequency of Assessing Whether the Hedge Effectiveness Requirements are Met Methods for Assessing Whether the Hedge Effectiveness Requirements are Met Measurement of Hedge Ineffectiveness Rebalancing the Hedging Relationship and Changes to the Hedge Ratio Discontinuation of Hedge Accounting Accounting for the Time Value of Options Accounting for the Forward Element of Forward Contracts and Foreign Currency Basis Spreads of Financial Instruments Layers of Groups of Items Designated as the Hedged Item Presentation of Hedging Instrument Gains or Losses Effective Date and Transition Financial Assets Held for Trading Impairment Appendix B Introduction Application of PBE IPSAS 41 to Hedges of a Net Investment in a Foreign Operation Example Entity D Holds Both USD and GBP Hedging Instruments Entity B Holds the USD Hedging Instrument Appendix C Appendix C: Extinguishing Financial Liabilities with Equity Instruments Introduction Scope Consensus Appendix D Basis for Conclusions Background to the Development of IPSAS 41 PBE IFRS 9 – An Interim Standard Decision to develop PBE IPSAS 41 Dividend and interest revenue Transition from PBE IFRS 9 Transition from PBE IPSAS 29 Interest Rate Benchmark Reform Interest Rate Benchmark Reform—Phase 2 2022 Omnibus Amendments to PBE Standards Public Sector Specific Financial Instruments