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PUBLIC BENEFIT ENTITY INTERNATIONAL PUBLIC SECTOR ACCOUNTING STANDARD 41 FINANCIAL INSTRUMENTS (PBE IPSAS 41)PBE IPSAS 41 FINANCIAL INSTRUMENTSPBE IPSAS 41 FINANCIAL INSTRUMENTSObjectiveScopeDefinitionsRecognition and DerecognitionClassificationMeasurementHedge AccountingDesignation of Hedging InstrumentsDesignation of Hedged ItemsAccounting for the Time Value of OptionsAccounting for the Forward Element of Forward Contracts and Foreign Currency Basis Spreads of Financial InstrumentsDesignation of a Component of a Nominal AmountPresentationNil Net PositionsAccounting for Credit Exposures Designated at Fair Value Through Surplus or DeficitHighly Probable Requirement for Cash Flow HedgesReclassifying the Amount Accumulated in the Cash Flow Hedge ReserveAssessing the Economic Relationship Between the Hedged Item and the Hedging InstrumentDesignating a Component of an Item as a Hedged ItemEnd of ApplicationGroups of ItemsDesignation of Risk ComponentsEffective Date and TransitionEntities Transitioning from PBE IFRS 9Entities Transitioning from PBE IPSAS 29ImpairmentScopeDefinitionsRecognition and DerecognitionRegular Way Purchase or Sale of Financial AssetsTransfers that Qualify for DerecognitionTransfers that do not Qualify for DerecognitionSale of Future Flows Arising from a Sovereign RightContinuing Involvement in Transferred AssetsAll TransfersExamplesClassificationThe Entity’s Management Model for Financial AssetsContractual Cash Flows That are Solely Payments of Principal and Interest on the Principal Amount OutstandingDesignation Eliminates or Significantly Reduces an Accounting MismatchA Group of Financial Liabilities or Financial Assets and Financial Liabilities is Managed and its Performance is Evaluated on a Fair Value BasisInstruments Containing Embedded DerivativesReassessment of Embedded DerivativesReclassification of Financial AssetsMeasurementInitial Measurement of Financial Assets and Financial Liabilities (paragraphs 57–59)Concessionary LoansEquity Instruments Arising from Non-Exchange TransactionsValuing Financial Guarantees Issued Through a Non-Exchange TransactionInvestments in Equity Instruments and Contracts on Those InvestmentsFair Value Measurement ConsiderationsActive Market: Quoted PriceNo Active Market: Valuation TechniqueInputs to Valuation TechniquesEffective Interest MethodTransaction CostsWrite-offCollective and Individual Assessment BasisTiming of Recognising Lifetime Expected Credit LossesDetermining Whether Credit Risk has Increased Significantly since Initial RecognitionModificationsExpected Credit LossesDefinition of DefaultPeriod over Which to Estimate Expected Credit LossesProbability-weighted OutcomeTime Value of MoneyReasonable and Supportable InformationCollateralLiabilities Designated as at Fair Value Through Surplus or DeficitDesignation of Hedging InstrumentsQualifying ItemsDesignation of Hedged ItemsHedge EffectivenessEconomic Relationship Between the Hedged Item and the Hedging InstrumentThe Effect of Credit RiskHedge RatioFrequency of Assessing Whether the Hedge Effectiveness Requirements are MetMethods for Assessing Whether the Hedge Effectiveness Requirements are MetMeasurement of Hedge IneffectivenessRebalancing the Hedging Relationship and Changes to the Hedge RatioDiscontinuation of Hedge AccountingAccounting for the Time Value of OptionsAccounting for the Forward Element of Forward Contracts and Foreign Currency Basis Spreads of Financial InstrumentsLayers of Groups of Items Designated as the Hedged ItemPresentation of Hedging Instrument Gains or LossesEffective Date and TransitionFinancial Assets Held for TradingImpairmentAppendix BIntroductionApplication of PBE IPSAS 41 to Hedges of a Net Investment in a Foreign OperationExampleEntity D Holds Both USD and GBP Hedging InstrumentsEntity B Holds the USD Hedging InstrumentAppendix C Appendix C: Extinguishing Financial Liabilities with Equity InstrumentsIntroductionScopeConsensusAppendix DBasis for ConclusionsBackground to the Development of IPSAS 41PBE IFRS 9 – An Interim StandardDecision to develop PBE IPSAS 41Dividend and interest revenueTransition from PBE IFRS 9Transition from PBE IPSAS 29Interest Rate Benchmark ReformInterest Rate Benchmark Reform—Phase 22022 Omnibus Amendments to PBE StandardsPublic Sector Specific Financial Instruments