IFRS 9 Financial Instruments Haseeb Mohammed 12 September 2017 - - PowerPoint PPT Presentation

IFRS 9 – Financial Instruments Haseeb Mohammed 12 September 2017

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Introduction

• You will be required to assist Ms Debt and Mr Equity on their accounting adventures

today.

• Ms Debt and Mr Equity work as part of the technical team at PwC Trinidad.
• They receive assignments and report to Mr Pess E Mystic.
• They will be visiting various islands in the Caribbean to assist clients with accounting

issues.

Introduction 2

Ms Debt Mr Equity

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IFRS 9 – Financial Instruments

• Ms Debt and Mr Equity work as part of the technical team

at PwC Trinidad.

• Ms Debt and Mr Equity specialises in accounting for financial

instruments

• Our clients need assistance in understanding and applying the requirements of IFRS 9

– Financial Instruments.

• You will have help Ms Debt and Mr Equity on this assignment as they have been

selected to assist.

• Tony DeBell is the head of the Technical team and will be

checking in with Ms Debt and Mr Equity during the assignment.

3

Spot Tony while using either the moustache or bow tie during the adventure to earn bonus points!!!

IFRS 9 – Financial Instruments

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Financial Instruments under IFRS Test your knowledge 1

IAS 32 covers the presentation and disclosure of financial instruments under the IFRS framework.

TRUE FALSE OR

Help Ms Debt and Mr Equity determine if the following statement relating to accounting for Financial Instruments under IFRS is either TRUE or FALSE.

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Financial Instruments under IFRS Test your knowledge 2

IAS 39 covers the recognition and disclosure of financial instruments under the IFRS framework.

TRUE FALSE OR

Help Ms Debt and Mr Equity determine if the following statement relating to accounting for Financial Instruments under IFRS is either TRUE or FALSE.

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Financial Instruments under IFRS Test your knowledge 3

IFRS 7 covers the disclosure of financial instruments under the IFRS framework.

TRUE FALSE OR

Help Ms Debt and Mr Equity determine if the following statement relating to accounting for Financial Instruments under IFRS is either TRUE or FALSE.

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How many phases were there in the IASB’s project for the new financial instruments standard (IFRS 9)? (a) 2 (b) 3 (c) 4 (d) 5

IFRS 9 – Financial Instruments Test your knowledge 4

IFRS 9 – Financial Instruments

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IFRS 9 – Financial Instruments Test your knowledge 5

What topic was being covered in the second phase of the IASB’s project for IFRS 9 ? (a) Impairment (b) Classification and Measurement (c) Hedging (d) De-recognition

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The IFRS 9 Journey…….

9

2009 2010 2011 2012 2013 2014 2015 2016 2017 2018

Nov 2009 C&M of financial assets Nov 2009 ED on impairment Oct 2010 C&M of financial liabilities & derecognition Jan 2011 Supplemental document on impairment Nov 2012 ED on C&M Limited amendments to IFRS 9 Nov 2013 IFRS 9 on hedge accounting and own credit Mar 2013 ED on Expected credit losses July 2014 IFRS 9 final standard Jan 2018 IFRS 9 effective date

IFRS 9 – Financial Instruments

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IFRS 9 – Financial Instruments

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Recognition

• f financial

instruments Derecognition

• f financial

instruments Measurement

• f financial

instruments Hedging Impairment Embedded derivatives

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IFRS 9 – Financial Instruments What we will be covering today

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Financial assets classification and measurement recap under IAS 39 Financial assets classification and measurement under IFRS 9

• Debt instruments
• Equity instruments

Financial liabilities classification and measurement under IFRS 9 New expected credit loss impairment model Transitional provisions and implementation challenges

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IFRS 9 – Financial Instruments

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IAS 39 - Recap

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Financial Instruments -IAS 39 - Recap

IAS 39

Objective Definitions Embedded derivatives Recognition and Measurement Derecognition Hedging Effective date and transition Introduction

Classification of financial assets Measurement of financial assets

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IFRS 9 – Financial Instruments Board Exercise 1

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Instructions

• Help Ms Debt and Mr Equity include the items

under the relevant category based on the requirements of IAS 39

• Use the pieces provided for this exercise.
• You will have 8 minutes.
• 1 point for each correct answer.

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IFRS 9 – Financial Instruments Book exercise 1

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Category of financial asset under IAS 39 Measurement basis Normal changes in carrying amount recorded in Initial recognition Subsequent Measurement SOLUTION

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Classification & Measurement – overview Financial assets

IAS 39 Held to Maturity At fair value through P&L Loans and receivables IFRS 9 Available for Sale Amortised cost Fair Value P&L OCI

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IFRS 9 – Financial Instruments

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Classification & Measurement

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Financial Instruments under IFRS Test your knowledge 6

IAS 39 was the first International Accounting Standard issued by the International Accounting Standards Board covering the recognition and measurement of Financial Instruments. IAS 39 was a principle based standard.

TRUE FALSE OR

Help Ms Debt and Mr Equity determine if the following statement relating to IAS 39 is either TRUE or FALSE.

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Financial Instruments under IFRS Test your knowledge 7

IFRS 9 replaces the classification and measurement models for financial assets in IAS 39.

TRUE FALSE OR

Help Ms Debt and Mr Equity determine if the following statement relating to accounting for Financial Instruments under IFRS is either TRUE or FALSE.

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Financial Instruments under IFRS Test your knowledge 8

IFRS 9 focuses on a company’s business model for managing financial assets.

TRUE FALSE OR

Help Ms Debt and Mr Equity determine if the following statement relating to accounting for Financial Instruments under IFRS is either TRUE or FALSE.

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IFRS 9 – Financial Instruments Classification and Measurement

Debt instruments

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IFRS 9 accounting treatment distinguishes between the following types of instruments Equity instruments

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IFRS 9 – Financial Instruments

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Classification & Measurement – Debt Instruments

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Overview of model

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Is the financial asset held to achieve an objective of both collecting contractual cash flows and selling financial assets? Do contractual cash flows represent solely principal and interest? Does the company apply the fair value option to eliminate an accounting mismatch? FVOCI FVPL

IFRS 9 YES NO NO YES

Amortised Cost Is objective of entity’s business model to hold the financial asset to collect contractual cash flows?

NO NO NO YES YES YES

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An entity’s business model Key Points

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Not at an instrument by instrument basis. Determined by an entity’s key management personnel Based on how the assets are managed and the assets performance are reported to them The business model for managing financial assets is a matter of fact and not merely an assertion. Determined at a level that reflects how groups of financial assets are managed to achieve a business objective

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Considerations for determination of the business model

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How the performance of the business model is evaluated and reported to key management personnel How managers of the business are compensated eg compensation based

• n the FV of the asset

managed. The risks that affect the business model and the way that those risks are managed

Not determined based on a single factor/activity Consider all available evidence at assessment date

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Financial Instruments under IFRS Test your knowledge 9

Under IFRS 9 there are four possible business models that an can choose from in order to classify its debt instruments.

TRUE FALSE OR

Help Ms Debt and Mr Equity determine if the following statement relating to IFRS 9 is either TRUE or FALSE.

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IFRS 9 - Classification & Measurement Debt instruments – IFRS 9 business model

IFRS 9 Business models Hold to collect Hold to collect and sell Fair value through P&L

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IFRS 9 - Classification & Measurement Steps in determining the business model

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Step 1 Determine the objective of the business model Step 2 Assess whether the asset’s contractual cash flows represents solely principal and interest payments (SPPI condition) Step 2 is necessary for financial assets or groups of financial assets to be classified at Amortised Cost or FVOCI

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IFRS 9 Financial Assets Hold to collect – business model test

Consider the following:

• The Company’s policy for managing financial assets.
• The business model is not dependent on management’s intentions for

each instrument.

• Classification in this category is not a free election
• Can be used in some instances where sale of financial assets occur or are

expected to occur in the future. Step 1

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Determine the objective of the business model Is the entity’s objective to hold the asset (or the portfolio) to collect the contractual cash flows subject to meeting the SPPI requirement?

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IFRS 9 guidance on sales within the hold to collect business model

Consider

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Historical frequency, timing and value of sales Expectation about future sales Reason for the sale eg credit deterioration.

Some sales / transfers before maturity not related to credit risk might be consistent with this business model if they are “infrequent” or “insignificant” in value No bright line for how many sales constitute “infrequent” or “insignificant”.

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IFRS 9 – Financial Instruments Test your knowledge 10

Yes No ABC Limited has trade receivables from its customers. Typically ABC Limited receives payment from customers within 60 days. If the receivable is not collected within 60 days, ABC Limited charges 2% interest on the amount outstanding. Does the trade receivable meet the criteria under the hold to collect business model test? OR

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IFRS 9 Financial Assets Hold to collect – Contractual cash flow analysis

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Step 2 Assess whether the asset’s contractual cash flows represents solely principal and interest payments (SPPI condition) Fair value of the financial asset at initial recognition. The principal amount can change over the life of the asset (eg principal repayments) PRINCIPAL Typically the compensation for the time value of money and credit risk. INTEREST This condition is necessary for classification into the hold to collect or hold to collect and sell categories.

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IFRS 9 Financial Assets Hold to collect – Contractual cash flow analysis

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IFRS 9 establishes that instruments with contractual cash flows that are SPPI on the principal outstanding are consistent with a basic lending arrangement. Contractual features that introduce exposure to risks or volatility in the contractual cash flows unrelated to a basic lending arrangement eg equity price risk do not give rise to contractual cash flows that are SPPI.

Convertible bonds

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IFRS 9 Financial Assets Hold to collect and sell – business model test

Examples of business model objectives that may be consistent with hold to collect and sell :

• Managing everyday liquidity needs;
• Maintaining a particular interest yield profile; and
• Matching the duration of financial assets to the duration of financial

liabilities that those assets are funding.

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Determine the objective of the business model Is the entity’s objective to hold the asset (or the portfolio) to collect the contractual cash flows and also to sell financial assets?

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IFRS 9 Financial Assets Hold to collect and sell – business model test

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This category acknowledges the following practical realties regarding debt instruments:

May need to rebalance entity’s net risk

• r duration

May need to adjust liquidity position Invest for the instrument’s yield Sell if price is advantageous

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IFRS 9 Financial Assets FVPL Business Model

IFRS 9 indicates that this the business model in which an entity manages financial assets with the objective of realising cash flows through the sale of the assets.

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FVPL is the residual category within IFRS 9 Financial asset not held within the hold to collect or the hold to collect and sell business model should be measured at FVPL. The entity makes decisions based on the asset’s fair values and manages the assets to realise their fair values (for e.g. a trading portfolio).

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IFRS 9 – Financial Instruments Book exercise 1 – IFRS 9 Business Model

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Book Exercise #1 Help Ms Debt and Mr Equity determine if the following statements are either TRUE or FALSE regarding the business model under IFRS 9 Time: 10 minutes (2 point for each correct answer)

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Question on an entity’s business model under IFRS 9. TRUE or FALSE

1) A financial asset is measured at amortised cost of either

• f the following criteria is met:
• The asset is held to collect its contractual cash flows
• The asset’s contractual cash flows represent SPPI.

2) Financial assets included in the held to collect category is initially recognised and subsequently measured at amortised cost. 3) A financial asset is measured at FVOCI if the following criterion is met:

• The objective of the business model is achieved by

collecting contractual cash flows and selling financial assets. 4) Financial assets included in the FVOCI category is initially recognised and subsequently measured at fair value.

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Question on an entity’s business model under IFRS 9. TRUE or FALSE

5) In IFRS 9, the fair value through profit or loss category is the residual category. 6) Under the FVOCI category, all movements in carrying amount of the financial asset should be taken through OCI. 7) Under the FVOCI category, if the financial asset is derecognised the cumulative gain or loss previously recognised in OCI cannot be reclassified to profit or loss. 8) An entity can elect to classify a financial asset at FVPL if so doing reduces or eliminates a measurement or recognition inconsistency.

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Question on an entity’s business model under IFRS 9. TRUE or FALSE

9) Reclassifications between categories i.e. amortised cost, FVOCI and FVPL are not permitted under IFRS 9. 10) A single entity can have more than one business model for managing its financial instruments. 11) Assets held as part of a group that are managed and their performance is evaluated on a fair value basis were allowed to be categorised as FVPL under IAS 39 (not mandatory), however, under IFRS 9 these assets must be classified under the FVPL category.

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IFRS 9 – Financial Instruments Bonus Trivia 3

• Entity A anticipates capital expenditure in 5 years and invests excess cash in

financial assets to fund future expenditure.

• Objective is to maximise return on financial assets.
• Entity will both hold some financial assets to collect the contractual cash flows

and, when an opportunity arises, sell some financial assets to realise gains. Which is the entity’s Business Model for the asset?

Hold to collect

FVPL

Hold to collect and sell

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IFRS 9 – Financial Instruments Test your knowledge 11

A: Yes B: No

• Entity A has available cash which it uses to purchase fixed income securities as

they provide more stable income relative to equities.

• The securities provide a steady stream of monthly fixed interest repayments and

repay the principal amount at maturity. Would the contractual terms of the instrument meet SPPI?

Yes No

OR

IFRS 9 – Financial Instruments 42

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IFRS 9 Financial Assets Contractual cash flow analysis

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IFRS 9 establishes that instruments with contractual cash flows that are SPPI on the principal outstanding are consistent with a basic lending arrangement. Contractual features that introduce exposure to risks or volatility in the contractual cash flows unrelated to a basic lending arrangement eg equity price risk do not give rise to contractual cash flows that are SPPI. E.g

Convertible bonds

Step 2 further analysed

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IFRS 9 Financial Assets Contractual cash flow analysis

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Modified SPPI IFRS 9 provides guidance on how to assess if contractual cash flows represent “SPPI” where the time value of money element of interest is modified

“Modified time value of money element”

Qualitative Assessment Quantitative Assessment

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IFRS 9 Financial Assets Contractual cash flow analysis

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Modified SPPI

Benchmark Instrument Instrument being assessed

If a modification results in cash flows that are significantly different from the benchmark cash flows Instrument fails the “SPPI Test” Compare cash flows

For modified time value of money assessment, compare instrument to benchmark instrument.

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IFRS 9 Financial Assets Contractual cash flow analysis

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Modified SPPI

Not necessary to perform detailed quantitative assessment if it is clear with little analysis that the cash flows will not be significantly different.

Points to consider for Quantitative Assessment: Compare undiscounted cash flows of the instrument and the benchmark instrument. Consider the effect of the modified time vale of money element in each reporting period and cumulatively over the instrument’s life. Benchmark instrument should have same credit risk and contractual term as the instrument.

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IFRS 9 – Financial Instruments Book exercise 2 – Cash flow Analysis

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Book Exercise #2 Help Ms Debt and Mr Equity classify the following items into those that may be OK and those that are Not OK for the cash flow analysis. Time: 5 minutes (1 point for each correct answer)

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IFRS 9 – Financial Instruments Book exercise 2 – Cash flow Analysis

Help Ms Debt and Mr Equity classify of the following items into those that may be OK and those that are Not OK for the cash flow analysis.

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• Interest on principal outstanding
• Credit risk
• Time value of money
• Principal
• Non-financial variables
• Leverage / multiples
• Conversion features

QUESTION

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IFRS 9 – Financial Instruments Book exercise 2 – Cash flow Analysis

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OK NOT OK SOLUTION

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Entity A holds a bond that pays interest at a risk-free rate and is convertible into shares up to 31 December 2016. The bond matures on 31 December 2021. The bond pays annual interest of 5%. (Assume Entity A’s business model objective is to collect contractual cash flows) This investment can be measured at amortised cost under IFRS 9.

IFRS 9 – Financial Instruments Test your knowledge 12

FALSE TRUE

OR

The conversion feature creates exposure to risks or volatility in the contractual cash flows unrelated to a basic lending arrangement.

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A non-financial institution holds a bond which pays LIBOR + 2%. The contractual provisions of the instrument establish that if the issuer credit rating changes, the interest rate of the entire instrument will be reset to LIBOR + 3%. The change in contractual cash flows for this instrument would satisfy the SPPI condition under IFRS 9.

IFRS 9 – Financial Instruments Test your knowledge 13

TRUE FALSE

OR

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IFRS 9 Financial Assets Contractual cash flow analysis

Examples of contractual provisions that meet the SPPI condition.

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Prepayment

• ption

A contractual term where an issuer can prepay a debt instrument before maturity, where the prepayment amount substantially represents unpaid amounts of principal and interest on the principal amount

• utstanding.

Extension

• ption

A contractual provision where the issuer or holder can extend the contractual term of a debt instrument, where the terms of the extension option result in contractual cash flows during the extension period that are SPPI on the principal amount outstanding.

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IFRS 9 – Financial Instruments Book exercise 3 – IFRS 9 Business Model

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Book Exercise #3 Help Ms Debt and Mr Equity determine the appropriate classification and subsequent measurement for the instruments held by Capital Company. Time: 8 minutes (2 point for each correct answer)

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IFRS 9 – Financial Instruments Book Exercise 3 - Question

Question 1 Capital Company Limited holds a bond that pays a variable interest rate which matures on 31 December 2020. The terms permit Capital Company to choose the interest rate. On each interest rate reset date, the holder can choose to pay 3 month LIBOR for a 3 month term or a 1 month LIBOR for a 1 month term. (Assume Capital Company Limited business model objective is to collect contractual cash flows) Under the rules of IFRS 9, what is the appropriate classification and subsequent measurement of this instrument? Please indicate the reason for your answer.

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QUESTION

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IFRS 9 – Financial Instruments Book Exercise 3 - Question

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SOLUTION

Question 1

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IFRS 9 – Financial Instruments Book Exercise 3 - Question

Question 2 Capital Company Limited holds a number of inflation-indexed Island 9 dollar denominated bonds. The bonds mature on 31 December

• 2018. The bonds pay annual interest of 5% + CPI (annual Island 9

inflation index). (Assume Capital Company Limited business model

• bjective is to collect contractual cash flows)

Under the rules of IFRS 9, what is the appropriate classification and subsequent measurement of this instrument? Please indicate the reason for your answer.

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QUESTION

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IFRS 9 – Financial Instruments Book Exercise 3 - Question

Question 2

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SOLUTION

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IFRS 9 – Financial Instruments Book Exercise 3 - Question

Question 3 Capital Company Limited has bonds that mature on 31 December

• 2025. The bonds pay annual interest of 5% and are indexed to the

debtor’s earnings before interest, tax, depreciation and amortisation (“EBITDA”). (Assume Capital Company Limited business model

• bjective is to collect contractual cash flows)

Under the rules of IFRS 9, what is the appropriate classification and subsequent measurement of this instrument? Please indicate the reason for your answer.

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QUESTION

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IFRS 9 – Financial Instruments Book Exercise 3 - Question

Question 3

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SOLUTION

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IFRS 9 – Financial Instruments

Classification & Measurement – Equity Instruments

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Classification & Measurement Equity instruments

Equity instruments are always measured at fair value Instruments that meet the definition of “equity” from issuer perspective as defined in IAS 32 Equity instruments that are held for trading are classified at FVPL Option to elect to measure at FVOCI if not held for trading Equity Securities

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Classification & Measurement Equity instruments at FVOCI

Irrecovable election on initial recognition Election on an instrument by instrument basis No subsequent recycling if measured at FVOCI but can be transferred within equity Dividends continue to be recognised in P&L Equity Securities Cost exemption for unquoted equity instruments removed

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Classification & Measurement Unquoted equity instruments

In limited circumstances cost might be used as an estimate of fair value Not applicable to equity instruments held by financial institutions or investment funds IFRS 9 includes indicators when cost might not be representative of fair value Equity Securities

For example - Significant changes in:

• Investee’s performance compared to budgets/plans.
• The market for the investee’s equity or its products.
• Performance of comparable entities.
• Internal matters such as fraud, commercial disputes, litigation,

changes in management or strategy.

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Entity A (the holder) invests in a Fund that has puttable shares in issue i.e. the holder has the right to put the shares back to the Fund in exchange for its pro rata share of the net assets. This investment in puttable shares can be recognised at FVOCI under IFRS 9.

IFRS 9 – Financial Instruments Test your knowledge 13

FALSE TRUE

OR

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Entity B (the holder) invests in a subordinated perpetual note, redeemable at the issuer’s option, with a fixed coupon that can be deferred indefinitely if the issuer does not pay a dividend on its

• rdinary shares.

This investment is an equity instrument under IAS 32. The holder of the instrument has the option of classifying at FVOCI or as FVPL under IFRS 9.

IFRS 9 – Financial Instruments Test your knowledge 14

FALSE TRUE

OR

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IFRS 9 – Financial Instruments

Classification & Measurement – Reclassifications

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Classification & Measurement Reclassifications

Reclassification are accounted for only when an entity changes its business model for managing financial assets Changes to the business model are expected to be infrequent Changes determined by entity’s senior management due to external or internal changes and should significantly affect the entity’s operations and be evident to external parties. A change in business model occurs when an entity either begins or ceases to perform an activity that is significant to its operations Reclassifications should be accounted for prospectively from the reclassification date.

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IFRS 9 – Financial Instruments Board Exercise 2

Instructions

• Help Ms Debt and Mr Equity match the accounting

impact to the specific type of reclassification.

• Use the pieces provided for this exercise.
• You will have 10 minutes.
• 1 point for each correct answer.

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Original Category New Category Accounting impact

Amortised cost FVPL FVPL Amortised cost Amortised cost FVOCI

Board Exercise 2 - Solution

IFRS 9

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Original Category New Category Accounting impact

FVOCI Amortised cost FVPL FVOCI FVOCI FVPL

Board Exercise 2 - Solution

IFRS 9

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IFRS 9 - Classification and Measurement

Summary of key points

• Equities measured at FVPL unless FVOCI election taken up for non trading assets.
• Entities need to assess debt instruments under the business model and SPPI tests to

determine whether the measurement basis is amortised cost or FVOCI.

• Option to designate at FVPL if there is an accounting mismatch.
• Instruments that do not meet one of the two tests are measured at FVPL.
• No bifurcation of embedded derivatives for financial assets.
• Reclassifications between categories are permitted. However, these are expected

to be rare.

• Reclassifications are to be accounted for prospectively.

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IFRS 9 – Financial Instruments

Classification & Measurement – Financial Liabilities

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Classification & Measurement Financial Liabilities

Classification and measurement under IFRS 9 generally the same as IAS 39 Except where an entity measures a financial liability at FVPL For such liabilities, changes in FV related to changes in own credit risk are presented separately in OCI. Amounts in OCI relating to own credit cannot be recycled to profit or loss when the liability is derecognised. Transfer within equity allowed. Financial Liabilities Separation of embedded derivatives in financial liabilities still required where they are no closely related to the host contract.

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IFRS 9 – Financial Instruments

Impairment Rules

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IFRS 9 – Financial Instruments Impairment Rules

Impairment based

• n the Incurred

loss model IAS 39 Impairment based

• n the Expected

credit loss (ECL) model IFRS 9 ECL model is a new model for recognition of impairment losses.

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IFRS 9 - Financial Instruments Impairment Model

The model has a “three stage” approach to measuring impairment loss which is based on the change in the credit quality

• f financial assets since initial recognition.

ECL Model

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This is a forward looking impairment model

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Impairment of financial assets

General ECL Model

Lifetime ECL 12 month ECL

Change in credit quality since initial recognition

Stage 1 Stage 2 Stage 3 Performing (Initial recognition*) Underperforming (Assets with significant increase in credit risk since initial recognition* ) Non-performing (Credit impaired assets) Objective evidence of impairment exists

*except for purchased or originated credit impaired assets

Lifetime ECL

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IFRS 9 – Financial Instruments Expected Credit Losses

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12-month ECLs Are the expected credit losses that result from default events that are possible within 12 months after the reporting date.

IFRS 9 – Financial Instruments

Lifetime ECLs Are the expected credit losses that result from all possible default events over the expected life

• f the financial instrument.

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IFRS 9 – Financial Instruments Exceptions to the ECL general model

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Trade receivables and assets with no significant financing component Financial assets with low credit risk Purchased or originated credit impaired assets. Lease receivables and trade receivables or assets that do contain a significant financing component

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IFRS 9 – Financial Instruments

Transitional Provisions and Implementation Challenges

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IFRS 9 – Financial Instruments Transitional Provisions

Post 1 Feb 2015 DIA but prior to 1 Jan 2018 Own Credit Risk for FL All Classification and Measurement + Impairment + Hedge Accounting* + Own credit risk (2014)

OR * Accounting policy choice (IFRS 9 or IAS39)

Early adopt only final version of IFRS 9.

Either

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IFRS 9 – Financial Instruments Transitional Provisions

Management is required to perform the business model assessment based on the circumstances at the date of initial application

However

Assessment of whether a financial asset complied with the “SPPI condition” is based on the facts that existed at the date of initial recognition of the instrument. Restatement of comparatives is NOT required but is permitted if entities can do so without the use of hindsight. Where comparatives are not restated, opening retained earnings should be adjusted in the year of initial application. On transition, additional disclosure is required in order assist users to understand the changes arising from the adoption of IFRS 9.

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IFRS 9 – Financial Instruments Implementation Challenges

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The new model in IFRS 9 is substantially different from IAS 39 Companies should document the reasons behind their assessment (including the SPPI) condition) Sales of financial assets will have to be monitored. Business model is dependent on history. For e.g. significant recurring sales. Business model assessment is highly judgmental and depends on the facts and circumstances. Process may take a significant amount of time. Entities should start planning their transition to IFRS 9 in order to ensure they are ready.

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Questions? Great job team!!!

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