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IAS 39 and IFRS 4 Amendments - Financial Guarantee Contracts


The Exposure Draft Financial Guarantee Contracts and Credit Insurance proposed that the issuer of a financial guarantee contract should measure the contract initially at fair value. If the financial guarantee contract was issued in a stand-alone arm's length transaction to an unrelated party, its fair value at inception is likely to equal the premium received. The Exposure Draft also addresses the subsequent measurement of those guarantees. The proposed requirements would apply even if the contract meets the definition of an insurance contract in IFRS 4 Insurance Contracts.

EFRAG published its final comment letter on the issue on 15 October 2004 and its endorsement advice on 24 October 2005.

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  • DCL
  • DEA