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Impairment
175. An entity shall apply the impairment requirements in paragraphs 73–93 retrospectively in accordance with PBE IPSAS 3 subject to paragraphs 173 and 176–178.
176. At the date of initial application, an entity shall use reasonable and supportable information that is available without undue cost or effort to determine the credit risk at the date that a financial instrument was initially recognised (or for loan commitments and financial guarantee contracts at the date that the entity became a party to the irrevocable commitment in accordance with paragraph 78) and compare that to the credit risk at the date of initial application of this Standard.
177. When determining whether there has been a significant increase in credit risk since initial recognition, an entity may apply:
(a) The requirements in paragraphs 82 and AG186–AG188; and
(b) The rebuttable presumption in paragraph 83 for contractual payments that are more than 30 days past due if an entity will apply the impairment requirements by identifying significant increases in credit risk since initial recognition for those financial instruments on the basis of past due information.
178. If, at the date of initial application, determining whether there has been a significant increase in credit risk since initial recognition would require undue cost or effort, an entity shall recognise a loss allowance at an amount equal to lifetime expected credit losses at each reporting date until that financial instrument is derecognised (unless that financial instrument is low credit risk at a reporting date, in which case paragraph 177(a) applies).
179. When an entity first applies this Standard, it may choose as its accounting policy to continue to apply the hedge accounting requirements of PBE IPSAS 29 instead of the requirements in paragraphs 113–155.26 of this Standard. An entity shall apply that policy to all of its hedging relationships. An entity that chooses that policy shall also apply Appendix C of PBE IPSAS 29.
180. Except as provided in paragraph 184, an entity shall apply the hedge accounting requirements of this Standard prospectively.
181. To apply hedge accounting from the date of initial application of the hedge accounting requirements of this Standard, all qualifying criteria must be met as at that date.
182. Hedging relationships that qualified for hedge accounting in accordance with PBE IPSAS 29 that also qualify for hedge accounting in accordance with the criteria of this Standard (see paragraph 129), after taking into account any rebalancing of the hedging relationship on transition (see paragraph 183(b)), shall be regarded as continuing hedging relationships.
183. On initial application of the hedge accounting requirements of this Standard, an entity:
(a) May start to apply those requirements from the same point in time as it ceases to apply the hedge accounting requirements of PBE IPSAS 29; and
(b) Shall consider the hedge ratio in accordance with PBE IPSAS 29 as the starting point for rebalancing the hedge ratio of a continuing hedging relationship, if applicable. Any gain or loss from such a rebalancing shall be recognised in surplus or deficit.
184. As an exception to prospective application of the hedge accounting requirements of this Standard, an entity:
(a) Shall apply the accounting for the time value of options in accordance with paragraph 144 retrospectively if, in accordance with PBE IPSAS 29, only the change in an option’s intrinsic value was designated as a hedging instrument in a hedging relationship. This retrospective application applies only to those hedging relationships that existed at the beginning of the earliest comparative period or were designated thereafter.
(b) May apply the accounting for the forward element of forward contracts in accordance with paragraph 145 retrospectively if, in accordance with PBE IPSAS 29, only the change in the spot element of a forward contract was designated as a hedging instrument in a hedging relationship. This retrospective application applies only to those hedging relationships that existed at the beginning of the earliest comparative period or were designated thereafter. In addition, if an entity elects retrospective application of this accounting, it shall be applied to all hedging relationships that qualify for this election (i.e., on transition this election is not available on a hedging- relationship-by-hedging-relationship basis). The accounting for foreign currency basis spreads (see paragraph 145) may be applied retrospectively for those hedging relationships that existed at the beginning of the earliest comparative period or were designated thereafter.
(c) Shall apply retrospectively the requirement of paragraph 135 that there is not an expiration or termination of the hedging instrument if:
(i) As a consequence of laws or regulations, or the introduction of laws or regulations, the parties to the hedging instrument agree that one or more clearing counterparties replace their original counterparty to become the new counterparty to each of the parties; and
(ii) Other changes, if any, to the hedging instrument are limited to those that are necessary to effect such a replacement of the counterparty.
(d) Shall apply the requirements in paragraphs 155.1–155.12 retrospectively. This retrospective application applies only to those hedging relationships that existed at the beginning of the reporting period in which an entity first applies those requirements or were designated thereafter, and to the amount accumulated in the cash flow hedge reserve that existed at the beginning of the reporting period in which an entity first applies those requirements.
184A–G[See Amendments to PBE IFRS 17]
184H An entity shall apply PBE Interest Rate Benchmark Reform—Phase 2 retrospectively in accordance with PBE IPSAS 3, except as specified in paragraphs 157.13–157.15.
184I An entity shall apply the amendments in 2022 Omnibus Amendments to PBE Standards to financial liabilities that are modified or exchanged on or after the beginning of the annual reporting period in which the entity first applies the amendment.
184.1 This Standard supersedes PBE IFRS 9. Effective Date of PBE IFRS 9, issued in March 2019, limited the early adoption of PBE IFRS 9 to annual periods beginning before 1 January 2020.
This Appendix is an integral part of PBE IPSAS 41.