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Entities Transitioning from PBE IPSAS 29
158. An entity shall apply this Standard retrospectively, in accordance with PBE IPSAS 3 Accounting Policies, Changes in Accounting Estimates and Errors, except as specified in paragraphs 161–184. This Standard shall not be applied to items that have already been derecognised at the date of initial application.
159. [Not used]
160. At the date of initial application, an entity shall assess whether a financial asset meets the condition in paragraphs 40(a) or 41(a) on the basis of the facts and circumstances that exist at that date. The resulting classification shall be applied retrospectively irrespective of the entity’s management model in prior reporting periods.
161. If, at the date of initial application, it is impracticable (as defined in PBE IPSAS 3) for an entity to assess a modified time value of money element in accordance with paragraphs AG68–AG70 on the basis of the facts and circumstances that existed at the initial recognition of the financial asset, an entity shall assess the contractual cash flow characteristics of that financial asset on the basis of the facts and circumstances that existed at the initial recognition of the financial asset without taking into account the requirements related to the modification of the time value of money element in paragraphs AG68–AG70. (See also paragraph 49R of PBE IPSAS 30.)
162. If, at the date of initial application, it is impracticable (as defined in PBE IPSAS 3) for an entity to assess whether the fair value of a prepayment feature was insignificant in accordance with paragraph AG74(c) on the basis of the facts and circumstances that existed at the initial recognition of the financial asset, an entity shall assess the contractual cash flow characteristics of that financial asset on the basis of the facts and circumstances that existed at the initial recognition of the financial asset without taking into account the exception for prepayment features in paragraph AG74. (See also paragraph 49S of PBE IPSAS 30.)
163. If an entity measures a hybrid contract at fair value in accordance with paragraphs 41, 43 or 44 but the fair value of the hybrid contract had not been measured in comparative reporting periods, the fair value of the hybrid contract in the comparative reporting periods shall be the sum of the fair values of the components (i.e., the non-derivative host and the embedded derivative) at the end of each comparative reporting period if the entity restates prior periods (see paragraph 173).
164. If an entity has applied paragraph 163 then at the date of initial application the entity shall recognise any difference between the fair value of the entire hybrid contract at the date of initial application and the sum of the fair values of the components of the hybrid contract at the date of initial application in the opening accumulated comprehensive revenue and expense (or other component of net assets/equity, as appropriate) of the reporting period that includes the date of initial application.
165. At the date of initial application an entity may designate:
(a) A financial asset as measured at fair value through surplus or deficit in accordance with paragraph 44; or
(b) An investment in an equity instrument as at fair value through other comprehensive revenue and expense in accordance with paragraph 106.
Such a designation shall be made on the basis of the facts and circumstances that exist at the date of initial application. That classification shall be applied retrospectively.
166. At the date of initial application an entity:
(a) Shall revoke its previous designation of a financial asset as measured at fair value through surplus or deficit if that financial asset does not meet the condition in paragraph 44.
(b) May revoke its previous designation of a financial asset as measured at fair value through surplus or deficit if that financial asset meets the condition in paragraph 44.
Such a revocation shall be made on the basis of the facts and circumstances that exist at the date of initial application. That classification shall be applied retrospectively.
167. At the date of initial application, an entity:
(a) May designate a financial liability as measured at fair value through surplus or deficit in accordance with paragraph 46(a).
(b) Shall revoke its previous designation of a financial liability as measured at fair value through surplus or deficit if such designation was made at initial recognition in accordance with the condition now in paragraph 46(a) and such designation does not satisfy that condition at the date of initial application.
(c) May revoke its previous designation of a financial liability as measured at fair value through surplus or deficit if such designation was made at initial recognition in accordance with the condition now in paragraph 46(a) and such designation satisfies that condition at the date of initial application.
Such a designation and revocation shall be made on the basis of the facts and circumstances that exist at the date of initial application. That classification shall be applied retrospectively.
168. If it is impracticable (as defined in PBE IPSAS 3) for an entity to apply retrospectively the effective interest method, the entity shall treat:
(a) The fair value of the financial asset or the financial liability at the end of each comparative period presented as the gross carrying amount of that financial asset or the amortised cost of that financial liability if the entity restates prior periods; and
(b) The fair value of the financial asset or the financial liability at the date of initial application as the new gross carrying amount of that financial asset or the new amortised cost of that financial liability at the date of initial application of this Standard.
169. If an entity previously accounted at cost (in accordance with PBE IPSAS 29), for an investment in an equity instrument that does not have a quoted price in an active market for an identical instrument (i.e., a Level 1 input) (or for a derivative asset that is linked to and must be settled by delivery of such an equity instrument) it shall measure that instrument at fair value at the date of initial application. Any difference between the previous carrying amount and the fair value shall be recognised in the opening accumulated comprehensive revenue and expense (or other component of net assets/equity, as appropriate) of the reporting period that includes the date of initial application.
169.1 Despite the requirements in paragraphs 45(c) and AG136, an entity that was previously unable to determine a reliable measure of the fair value of a financial guarantee contract issued through a non-exchange transaction shall, at the date of initial application, measure the contract at the higher of:
(a) The loss allowance determined in accordance with paragraphs 73–93; and
(b) The previous carrying amount determined in accordance with PBE IPSAS 29.
Any difference between the amount determined at the date of initial application and the previous carrying amount shall be recognised in the opening accumulated comprehensive revenue and expense of the reporting period that includes the date of initial application. The amount recognised at the date of initial application becomes the amount initially recognised in accordance with this Standard.
170. If an entity previously accounted for a derivative liability that is linked to, and must be settled by, delivery of an equity instrument that does not have a quoted price in an active market for an identical instrument (i.e., a Level 1 input) at cost in accordance with PBE IPSAS 29, it shall measure that derivative liability at fair value at the date of initial application. Any difference between the previous carrying amount and the fair value shall be recognised in the opening accumulated comprehensive revenue and expense of the reporting period that includes the date of initial application.
171. At the date of initial application, an entity shall determine whether the treatment in paragraph 108 would create or enlarge an accounting mismatch in surplus or deficit on the basis of the facts and circumstances that exist at the date of initial application. This Standard shall be applied retrospectively on the basis of that determination.
172. At the date of initial application, an entity is permitted to make the designation in paragraph 6 for contracts that already exist on the date but only if it designates all similar contracts. The change in the net assets resulting from such designations shall be recognised in net assets/equity at the date of initial application.
173. Despite the requirement in paragraph 158, an entity that adopts the classification and measurement requirements of this Standard (which include the requirements related to amortised cost measurement for financial assets and impairment in paragraphs 69–72 and paragraphs 73–93) shall provide the disclosures set out in paragraphs 49L–49O of PBE IPSAS 30 but need not restate prior periods. The entity may restate prior periods if, and only if, it is possible without the use of hindsight. If an entity does not restate prior periods, the entity shall recognise any difference between the previous carrying amount and the carrying amount at the beginning of the annual reporting period that includes the date of initial application in the opening accumulated comprehensive revenue and expense (or other component of net assets/equity, as appropriate) of the annual reporting period that includes the date of initial application. However, if an entity restates prior periods, the restated financial statements must reflect all of the requirements in this Standard.
174. If an entity prepares interim financial reports in accordance with PBE IAS 34 Interim Financial Reporting the entity need not apply the requirements in this Standard to interim periods prior to the date of initial application if it is impracticable (as defined in PBE IPSAS 3).