Document icon

Financial Instruments (Replacement of IAS 39): Impairment - 2009 Exposure Draft


The Exposure Draft Financial Instruments: Amortised Cost and Impairment (ED), was published in November 2009 and proposed to clearly set out the objective of amortised cost measurement and how it should be calculated. Impairment of financial assets is an integral component of the amortised cost measurement model.

The objective of the proposals was to establish principles for the measurement of financial assets and financial liabilities at amortised cost to provide useful information to users of financial statements for their assessment of the amounts, timing and uncertainty of future cash flows. This includes the allocation of expected cash flows over the expected life of financial instruments based on conditions existing at initial recognition as well as subsequent impairment of the financial instruments. The key issues therefore related to:

  • The effective interest method; and
  • The expected cash flow approach (including future credit losses).

The ED also included guidance on presentation and disclosure that aimed to support the measurement objective.

An Impairment Expert Advisory Panel (EAP) was set to advise the IASB on operational issues arising from the model proposed in the exposure draft.

In March and April 2010, in order to assess the implications of the proposals in the ED from an implementation perspective and as part of its due process on the exposure draft, EFRAG concluded 18 consultations with entities from the banking, insurance, audit and industrial sector, representing seven countries across Europe. EFRAG issued its comment letter in June 2010. The feedback received by the IASB on the exposure draft confirmed significant operational issues.

To see further developments on impairment of financial assets please refer to the following projects:

  Impairment - ED 2011  Impairment - ED 2013

For information on the development of all phases of IFRS 9: please refer to the following project:    IFRS 9 - Financial Instruments

Show more...