https://wiki.treasurers.org/w/index.php?action=history&feed=atom&title=Non-substantial_modification 2026-08-13T18:00:25Z Revision history for this page on the wiki MediaWiki 1.40.0 https://wiki.treasurers.org/w/index.php?title=Non-substantial_modification&diff=57130&oldid=prev 2024-10-30T22:23:18Z

<p>Create page - source - IFRS 9.</p> <p><b>New page</b></p><div>''Financial reporting - financial assets - financial liabilities - renegotiation - modification - International Financial Reporting Standards (IFRS) - IFRS 9.''<br /> <br /> Under IFRS 9 (Appendix B - Application guidance - paragraph 3.3.6) a modification is substantial if there is a difference of 10% or more in the discounted present value of the cash flows under the new terms, compared with the original terms.<br /> <br /> Other modifications are non-substantial.<br /> <br /> <br /> :&lt;span style=&quot;color:#4B0082&quot;&gt;'''''Accounting and tax surprises under IFRS 9'''''&lt;/span&gt;<br /> <br /> :&quot;Corporate borrowers often need to renegotiate their existing loan liabilities, and in many companies this responsibility will fall on the treasurer. <br /> <br /> :Although treasurers may not necessarily be accounting experts, they still need to carefully consider the potential accounting impacts when renegotiating loan terms. <br /> <br /> :Under IFRS 9: Financial Instruments, loan modifications can trigger gains and losses for financial reporting purposes and may even have tax implications...<br /> <br /> :[Fictional example...] If the difference is less than 10%, the modification is deemed non-substantial, and the [existing] loan would be adjusted to a new carrying amount of £470m as per the 10% test. This adjustment would result in an immediate £19m gain in the profit and loss account.&quot;<br /> <br /> :''Renegotiating a loan? Get the accounting right - Kern Roberts, managing director, global accounting practice lead Chatham Financial.''<br /> <br /> <br /> == See also ==<br /> * [[Derecognition]]<br /> * [[Derivative instrument]]<br /> * [[Discounted cash flow]]<br /> * [[Extinguishment]]<br /> * [[Fair Value Adjustment]]<br /> * [[Financial asset]]<br /> * [[Financial instrument]]<br /> * [[Financial liability]]<br /> * [[Hedge accounting]]<br /> * [[IAS 32]]<br /> * [[IAS 39]]<br /> * [[IFRS 9]]<br /> * [[IFRS 9 hedge accounting reforms: a closer reflection of risk management?]]<br /> * [[IFRS 15]]<br /> * [[Impairment]]<br /> * [[International Financial Reporting Standards]] (IFRS)<br /> * [[Modification]]<br /> * [[Modification gain or loss]]<br /> * [[Present value]]<br /> * [[Recognition]]<br /> * [[Set-off]]<br /> * [[Substantial modification]]<br /> <br /> <br /> ==Other resources==<br /> *[https://www.iasplus.com/en/standards/ifrs/ifrs9 IFRS 9 summary - IAS Plus]<br /> *[https://www.ifrs.org/content/dam/ifrs/publications/pdf-standards/english/2022/issued/part-a/ifrs-9-financial-instruments.pdf?bypass=on IFRS 9 full text - IFRS webpage]<br /> *[https://www.treasurers.org/hub/treasurer-magazine/renegotiating-loan-get-accounting-right-warns-adviser Renegotiating a loan? Get the accounting right - Kern Roberts, managing director, global accounting practice lead Chatham Financial]<br /> <br /> [[Category:Accounting,_tax_and_regulation]]<br /> [[Category:Financial_products_and_markets]]<br /> [[Category:Long_term_funding]]<br /> [[Category:The_business_context]]<br /> <br /> [[Category:Accounting,_tax_and_regulation]]<br /> [[Category:Financial_products_and_markets]]<br /> [[Category:Long_term_funding]]<br /> [[Category:The_business_context]]</div>

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