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IASB proposes amendments to clarify the accounting for embedded derivatives

22 December 2008

 

The International Accounting Standards Board (IASB) today published for public comment proposals to clarify the accounting treatment for embedded derivatives.

The proposals respond to requests received from those taking part in the recent round-table discussions organised by the IASB and the US Financial Accounting Standards Board (FASB) to clarify the requirements in IAS 39 Financial Instruments: Recognition and Measurement and IFRIC 9 Reassessment of Embedded Derivatives.

Participants asked the IASB to act in order to prevent any diversity in practice developing as a result of the amendments made to IAS 39 in October 2008 to permit the reclassification of particular financial assets. The proposals published today would require all embedded derivatives to be assessed and, if necessary, separately accounted for in financial statements.

Related documents

Commenting on the proposals, Sir David Tweedie, IASB Chairman, said:

  • In October 2008, in response to exceptional circumstances, the IASB amended accounting standards relating to the reclassification of financial instruments. Issuing that amendment without normal due process always carried the risk of unintended consequences, and these proposals seek to clarify the application of that amendment to embedded derivatives.

The proposals are set out in an exposure draft Embedded Derivatives, on which the IASB invites comments by 21 January 2009. The exposure draft is available on the Website from the 'open for comment' at www.iasb.org.

IASC Foundation Publications Department,
30 Cannon Street, London EC4M 6XH, United Kingdom.

Tel: +44 (0)20 7332 2730
Fax +44 (0)20 7332 2749

Email: publications@iasb.org
Web: www.iasb.org

For more details on the IASB’s response to the financial crisis visit the ‘Credit crisis' section of the Website.

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  • Mark Byatt, Director of Corporate Communications, IASB
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    Email: mbyatt@iasb.org
  • Sonja Horn, Communications Adviser, IASB
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