Substantial modification

From ACT Wiki
Revision as of 22:13, 30 October 2024 by Doug (talk | contribs) (Create page - source - IFRS 9.)
(diff) ← Older revision | Latest revision (diff) | Newer revision → (diff)
Jump to navigationJump to search

Financial reporting - financial assets - financial liabilities - renegotiation - modification - International Financial Reporting Standards (IFRS) - IFRS 9.

Under IFRS 9 (Appendix B - Application guidance - paragraph 3.3.6) a modification is substantial if there is a difference of more than 10% in the discounted present value of the cash flows under the new terms, compared with the original terms.

A substantial modification is accounted for as an extinguishment.


Accounting and tax surprises under IFRS 9
"Corporate borrowers often need to renegotiate their existing loan liabilities, and in many companies this responsibility will fall on the treasurer.
Although treasurers may not necessarily be accounting experts, they still need to carefully consider the potential accounting impacts when renegotiating loan terms.
Under IFRS 9: Financial Instruments, loan modifications can trigger gains and losses for financial reporting purposes and may even have tax implications."
Renegotiating a loan? Get the accounting right - Kern Roberts, managing director, global accounting practice lead Chatham Financial.


See also


Other resources