variable interest rate, Ch. 44, 6.4.4
contracts, Ch. 42, 6
designation at fair value through profit or loss, Ch. 44, 7
embedded non-option derivatives, Ch. 42, 6.1
effective date, Ch. 44, 10.1
embedded option-based derivative, Ch. 42, 6.2
financial assets and liabilities held for trading, Ch. 44, 4
multiple embedded derivatives, Ch. 42, 6.4
financial assets classification, Ch. 44, 2
nature of a financial instrument host, Ch. 42, 6.3
debt instruments, Ch. 44, 2.1
insurance contracts, Ch. 42, 5.4
equity instruments and derivatives, Ch. 44, 2.2
leases, Ch. 42, 5.3
financial liabilities classification, Ch. 44, 3
reassessment, Ch. 42, 7
reclassification of financial assets, Ch. 44, 9
acquisition of contracts, Ch. 42, 7.2
transition provisions, Ch. 44, 10.2
business combinations, Ch. 42, 7.3
applying contractual cash flow characteristics test, Ch. 44,
IFRIC 9, Ch. 42, 7.1
10.2.3
remeasurement issues arising from reassessment,
applying the ‘business model’ assessment, Ch. 44, 10.2.2
Ch. 42, 7.4
date of initial application, Ch. 44, 10.2.1
future settlement, Ch. 42, 2.3
financial instruments derecognised prior to the date of
initial net investment, Ch. 42, 2.2
initial application, Ch. 44, 10.2.6
in-substance derivatives, Ch. 42, 3.2
making and revoking designations, Ch. 44, 10.2.4
linked and separate transactions and ‘synthetic’ instruments,
restatement of comparatives, Ch. 44, 10.2.5
Ch. 42, 8
transition adjustments and measurement of financial assets
prepaid forward purchase of shares, Ch. 42, 2.2
and liabilities, Ch. 44, 10.2.7
prepaid interest rate swap, Ch. 42, 2.2
financial assets and liabilities measured at amortised
regular way contracts, Ch. 42, 3.3
cost, Ch. 44, 10.2.7.B
Financial Instruments: disclosures (IFRS 7), Ch. 50, 1–9
hybrid financial assets, Ch. 44, 10.2.7.A
Financial instruments, extractive industries, Ch. 39, 13
unquoted equity investments, Ch. 44, 10.2.7.C
embedded derivatives, Ch. 39, 13.2
Financial instruments, derecognition, Ch. 48, 1–7. See also
development of gas markets, Ch. 39, 13.2.4
Derecognition
foreign currency embedded derivatives, Ch. 39, 13.2.1
Financial instruments, derivatives and embedded derivatives,
long-term supply contracts, Ch. 39, 13.2.3
Ch. 42, 1–8
provisionally priced sales contracts, Ch. 39, 13.2.2
call and put options over noncontrolling interests, Ch. 7, 6.
hedging sales of metal concentrate (mining), Ch. 39, 13.4
See also Non-controlling interests
normal purchase and sales exemption, Ch. 39, 13.1
changes in value in response to changes in underlying,
volume flexibility in supply contracts, Ch. 39, 13.3
Ch. 42, 2.1
Financial instruments: financial liabilities and equity, Ch. 43,
non-financial variables specific to one party to the contract,
1–12
Ch. 42, 2.1.3
background, Ch. 43, 1.1
notional amounts, Ch. 42, 2.1.1
classification of instruments, Ch. 43, 4
underlying variables, Ch. 42, 2.1.2
consolidated financial statements, Ch. 43, 4.8.1
common derivatives, Ch. 42, 3.1
contingent settlement provisions, Ch. 43, 4.3
embedded derivatives, Ch. 42, 4
contractual obligation to deliver cash or other financial
contracts for the sale of goods or services, Ch. 42, 5.2
assets, Ch. 43, 4.2
floors and caps, Ch. 42, 5.2.4
definition of equity instrument, Ch. 43, 4.1
foreign currency derivatives, Ch. 42, 5.2.1
examples of equity instruments, Ch. 43, 4.4
fund performance fees, Ch. 42, 5.2.5
contracts to issue equity instruments, Ch. 43, 4.4.2
inflation-linked features, Ch. 42, 5.2.3
issued instruments, Ch. 43, 4.4.1
inputs, ingredients, substitutes and other proxy pricing
instruments redeemable
mechanisms, Ch. 42, 5.2.2
mandatorily or at the holder’s option, Ch. 43, 4.5.1
financial instrument hosts, Ch. 42, 5.1
only at the issuer’s option or not redeemable, Ch. 43,
callable equity instruments, Ch. 42, 5.1.10
4.5.2
commodity-and equity-linked interest and principal
with a ‘dividend blocker,’ Ch. 43, 4.5.3.A
payments, Ch. 42, 5.1.6
with a ‘dividend pusher,’ Ch. 43, 4.5.3.B
convertible and exchangeable debt instruments, Ch.
perpetual debt, Ch. 43, 4.7
42, 5.1.8
preference shares and similar instruments, Ch. 43, 4.5
credit-linked notes, Ch. 42, 5.1.7
puttable instruments and instruments repayable only on
foreign currency monetary items, Ch. 42, 5.1.1
liquidation, Ch. 43, 4.6.5
inflation-linked debt instruments, Ch. 42, 5.1.5
reclassification of instruments
interest rate floors and caps, Ch. 42, 5.1.4
change of circumstances, Ch. 43, 4.9.2
interest rate indices, Ch. 42, 5.1.2
change of terms, Ch. 43, 4.9.1
puttable instruments, Ch. 42, 5.1.9
single entity financial statements, Ch. 43, 4.8.2
Index
133
compound financial instruments, Ch. 43, 6
debt for equity swaps with shareholders, Ch. 43, 7.3
background, Ch. 43, 6.1
requirements of IFRIC 19, Ch. 43, 7.2
common forms of convertible bonds, Ch. 43, 6.6
scope and effective date of IFRIC 19, Ch. 43, 7.1
bond convertible into fixed percentage of equity,
treasury shares, Ch. 43, 9
Ch. 43, 6.6.6
IFRS 17 Treasury share election, Ch. 43, 9.2
contingent convertible bond, Ch. 43, 6.6.2
transactions in own shares not at fair value, Ch. 43, 9.1
convertible bonds with down round or ratchet features,
Financial instruments: hedge accounting, Ch. 49, 1–14
Ch. 43, 6.6.7
accounting for the costs of hedging, Ch. 49, 7.5
convertibles with cash settlement at the option of the
foreign currency basis spreads in financial instruments,
issuer, Ch. 43, 6.6.5
Ch. 49, 7.5.3
foreign currency convertible bond, Ch. 43, 6.6.4
forward element of forward contracts, Ch. 49, 7.5.2
functional currency bond convertible into a fixed
time value of options, Ch. 49, 7.5.1
number of shares, Ch. 43, 6.6.1
aggregated exposures, Ch. 49, 2.7
mandatorily convertible bond, Ch. 43, 6.6.3
accounting for, Ch. 49, 2.7.3
components, Ch. 43, 6.4
alternatives to hedge accounting, Ch. 49, 12
compound instruments with embedded derivatives,
credit risk exposures, Ch. 49, 12.1
Ch. 43, 6.4.2
own use contracts, Ch. 49, 12.2
determining the components of a financial instrument,
background, Ch. 49, 1.1
Ch. 43, 6.4.1
develo
pment of, Ch. 49, 1.3
conversion
disclosure, Ch. 49, 10
at maturity, Ch. 43, 6.3.1
amount, timing and uncertainty of future cash flows,
before maturity, Ch. 43, 6.3.2
Ch. 49, 10.3
early redemption/repurchase, Ch. 43, 6.3.3
background and general requirements, Ch. 49, 10.1
exercising an embedded call option, Ch. 43, 6.3.3.B
effects of hedge accounting on the financial position and
through negotiation with bondholders, Ch. 43, 6.3.3.A
performance, Ch. 49, 10.4
initial recognition–’split accounting,’ Ch. 43, 6.2
risk management strategy, Ch. 49, 10.2
accounting for the equity component, Ch. 43, 6.2.1
discontinuation, Ch. 49, 8.3, 14.5,
temporary differences arising from split accounting,
of cash flow hedges, Ch. 49, 8.3.2
Ch. 43, 6.2.2
of fair value hedges, Ch. 49, 8.3.1
modification, Ch. 43, 6.3.4
novation to central clearing parties, Ch. 49, 8.3.2.A
treatment by holder and issuer contrasted, Ch. 43, 6.1.1
replacement of IBOR, Ch. 49, 8.3.2.C
contracts accounted for as equity instruments, Ch. 43, 5.1
settle to market derivatives, Ch. 49, 8.3.2.B
contracts accounted for as financial assets or financial
economic relationship, Ch. 49, 6.4.1
liabilities, Ch. 43, 5.2
effective hedges, accounting for, Ch. 49, 7
definitions, Ch. 43, 3
cash flow hedges, Ch. 49, 7.2
derivatives over own equity instruments, Ch. 43, 11
acquisition or disposal of subsidiaries, Ch. 49, 7.2.4
call options, Ch. 43, 11.2
all-in-one hedges, Ch. 49, 5.2.1
purchased call option, Ch. 43, 11.2.1
novation of, due to central clearing regulations,
written call option, Ch. 43, 11.2.2
Ch. 49, 8.3.2.A
forward contracts, Ch. 43, 11.1
discontinuing, Ch. 49, 8.3.2
‘back-to-back’ forward contracts, Ch. 43, 11.1.3
firm commitments, hedges of, Ch. 49, 5.2.2
forward purchase, Ch. 43, 11.1.1
foreign currency monetary items, Ch. 49, 5.2.3
forward sale, Ch. 43, 11.1.2
hypothetical derivatives, Ch. 49, 7.4.4.A
put options
measuring ineffectiveness of, Ch. 49, 7.4.4.E
purchased put option, Ch. 43, 11.3.1
of a net position, Ch. 49, 2.5.3
written put option, Ch. 43, 11.3.2
ongoing accounting, Ch. 49, 7.2.1
future developments, Ch. 43, 12
presentation, Ch. 49, 9.1,
gross-settled contracts for the sale or issue of the entity’s own
reclassification of gains and losses, Ch. 49, 7.2.2
equity instruments, Ch. 43, 5.4
documented rollover hedging strategy, Ch. 49, 7.7
‘hedging’ of instruments classified as equity, Ch. 43, 10
fair value hedges, Ch. 49, 1.5, 5.1, 7.1
interest, dividends, gains and losses, Ch. 43, 8
adjustments to the hedged item, Ch. 49, 7.1.2
tax effects, Ch. 43, 8.2
discontinuing, Ch. 49, 8.3.1
transaction costs, Ch. 43, 8.1
ongoing accounting, Ch. 49, 7.1.1
liabilities arising from gross-settled contracts for the purchase
firm commitments, Ch. 49, 5.1.1
of the entity’s own equity instruments, Ch. 43, 5.3
foreign currency monetary items, Ch. 49, 5.1.2
contracts to acquire non-controlling interests, Ch. 43, 5.3.2
layer components for, Ch. 49, 2.3.2
contracts to purchase own equity during ‘closed’ or
presentation, Ch. 49, 9.2
‘prohibited’ periods, Ch. 43, 5.3.1
hedges of a firm commitment to acquire a business,
objective, Ch. 43, 2.1
Ch. 49, 7.6
scope, Ch. 43, 2.2
hedges of a net investment in a foreign operation,
settlement of financial liability with equity instrument, Ch. 43, 7
accounting for, Ch. 7, 2.3; Ch. 49, 1.5, 5.3, 7.3, 8.3.3
134 Index
Financial instruments: hedge accounting —contd
credit break clauses, Ch. 49, 3.2.4
effective date and transition, Ch. 49, 13
embedded derivatives, Ch. 49, 3.2.3
limited retrospective application, Ch. 49, 13.3
net written options, Ch. 49, 3.2.2
prospective application in general, Ch. 49, 13.2
offsetting external derivatives, Ch. 49, 3.2.1
effectiveness assessment, Ch. 49, 8.1, 6.4
embedded derivatives, Ch. 49, 3.2.3
credit risk dominance, Ch.49, 6.4.2
general requirements, Ch. 49, 3.1
economic relationship, Ch.49, 6.4.1
hedging different risks with one instrument, Ch. 49, 3.7
hedge ratio, Ch.49, 6.4.3
non-derivative financial instruments, Ch. 49, 3.3
effectiveness measurement, Ch. 49, 7.4
of foreign currency risk, Ch. 49, 3.3.1
calculation of, Ch. 49, 7.4.3
non-derivative liabilities, Ch. 49, 3.3
‘clean’ vs. ‘dirty’ values, Ch. 49, 7.4.7
own equity instruments, Ch. 49, 3.4
comparison of spot rate and forward rate methods,
portions and proportions of, Ch. 49, 3.6
Ch. 49, 7.4.5
foreign currency basis spread, Ch. 49, 3.6.5
detailed example of calculation of ineffectiveness for a cash
interest elements of forwards, Ch. 49, 3.6.5
flow hedge, Ch. 7.4.4.E
notional decomposition, Ch. 49, 3.6.2
discount rates for calculating fair value of actual and
portion of a time period, Ch. 49, 3.6.6
hypothetical derivatives, Ch. 49, 7.4.4.C
proportions of instruments, Ch. 49, 3.6.1
effectiveness of options, Ch. 49, 7.4.8
restructuring of derivatives, Ch. 49, 3.6.3
foreign currency basis spreads, Ch. 49, 7.4.4.D
time value of options, Ch. 49, 3.6.4
general requirements, Ch. 7.4.1
hedging relationships, types of, Ch. 49, 5
hedged items with embedded optionality, Ch. 49, 7.4.9
cash flow hedges, Ch. 49, 5.2
hedging instrument’s impact on credit quality, Ch. 49,
all-in-one hedges, Ch. 49, 5.2.1
7.4.6
firm commitments hedges, Ch. 49, 5.2.2
hedging using instruments with a non-zero fair value,
foreign currency monetary items, Ch. 49, 5.2.3
Ch. 49, 7.4.4.B
fair value hedges, Ch. 49, 5.1
hypothetical derivative, Ch. 49, 7.4.4.A
firm commitments, hedges of, Ch. 49, 5.1.1
time value of money, Ch. 49, 7.4.2
foreign currency monetary items, hedges of, Ch. 49,
hedged items, Ch. 49, 2
5.1.2
core deposits, Ch. 49, 2.6.7
hedges of net investments in foreign operations, Ch. 49,
held at fair value through profit or loss, Ch. 49, 2.6.2
5.3
held at fair value through OCI, Ch. 49, 2.6.3
amount of the hedged item for which a hedging
firm commitment to acquire a business, Ch. 49, 7.64
relationship may be designated, Ch. 49, 5.3.2
forecast acquisition/issuance of foreign currency monetary
nature of the hedged risk, Ch. 49, 5.3.1
items, Ch. 49, 2.6.5
where the hedging instrument can be held, Ch. 4
9,
general requirements, Ch. 49, 2.1
5.3.3
groups of items, Ch. 49, 2.5
ineffectiveness, measuring, Ch. 49, 7.4.3
cash flow hedge of a net position, Ch. 49, 2.5.3
internal hedges and other group accounting issues,
general requirements, Ch. 49, 2.5.1
Ch. 49, 4
hedging a component of a group, Ch. 49, 2.5.2
central clearing parties, Ch. 49, 4.1.1
nil net positions, Ch. 49, 2.5.4
external hedging instruments, offsetting, Ch. 49, 4.2
highly probable, Ch. 49, 2.6.1
hedged item and hedging instrument held by different
internal, Ch. 49, 4.3
group entities, Ch. 49, 4.4
nominal components. Ch. 49, 2.3
internal hedged items, Ch. 49, 4.3
general requirement, Ch. 49, 2.3.1
internal hedging instruments, Ch. 49, 4.1
layer component for fair value hedge,
offsetting internal hedges instruments, Ch. 49, 4.2
Ch. 49, 2.3.2
macro hedging, Ch. 49, 11
own equity instruments, Ch. 49, 2.6.6
accounting for dynamic risk management, Ch. 49, 11.1
risk components, Ch. 49, 2.2
macro hedging strategies under IFRS 9, Ch. 49, 11.2
contractually specified, Ch. 49, 2.2.2
main differences between IFRS 9 and IAS 39 hedge
foreign currency as, Ch. 49, 2.2.5
accounting requirements, Ch. 49, 14
general requirements, Ch. 49, 2.2.1
discontinuation, Ch. 49, 14.5
inflation as, Ch. 49, 2.2.6
effectiveness criteria, Ch. 49, 14.4
non-contractually specified, Ch. 49, 2.2.3
eligible hedged items, Ch. 49, 14.2
partial term hedging, Ch. 49, 2.2.4
eligible hedging instruments, Ch. 49, 14.3
sub-LIBOR issue, Ch. 49, 2.4
hedge accounting mechanisms, Ch. 49, 14.5
negative interest rates, Ch. 49, 2.4.2
objective of hedge accounting, Ch. 49, 14.1
hedge ratio, Ch. 49, 6.4.3
portfolio/macro hedging, Ch. 49, 11
hedging instruments, Ch. 49, 3
objective of, Ch. 49, 1.4
combinations of instruments, Ch. 49, 3.5
overview, Ch. 49, 1.5
derivatives, Ch. 49, 3.2
own use contracts, Ch. 49, 12.2
basis swaps, Ch. 49, 3.2.5
presentation, Ch. 49, 9
Index
135
cash flow hedges, Ch. 49, 9.1
market risk, Ch. 50, 5.5
cost of hedging, Ch. 49, 9.4
‘basic’ sensitivity analysis, Ch. 50, 5.5.1
fair value hedges, Ch. 49, 9.2
other market risk disclosures, Ch. 50, 5.5.3
hedges of groups of items, Ch. 49, 9.3
value-at-risk and similar analyses, Ch. 50, 5.5.2
proxy hedges, Ch. 49, 6.2.1
International GAAP® 2019: Generally Accepted Accounting Practice under International Financial Reporting Standards Page 978
