Commission Regulation (EC) No 1126/2008Show full title

[F1 4.2 CLASSIFICATION OF FINANCIAL LIABILITIES U.K.

4.2.1. An entity shall classify all financial liabilities as subsequently measured at amortised cost, except for: U.K.

(a)

financial liabilities at fair value through profit or loss . Such liabilities, including derivatives that are liabilities, shall be subsequently measured at fair value.

(b)

financial liabilities that arise when a transfer of a financial asset does not qualify for derecognition or when the continuing involvement approach applies. Paragraphs 3.2.15 and 3.2.17 apply to the measurement of such financial liabilities.

(c)

financial guarantee contracts . After initial recognition, an issuer of such a contract shall (unless paragraph 4.2.1(a) or (b) applies) subsequently measure it at the higher of:

(i)

the amount of the loss allowance determined in accordance with Section 5.5 and

(ii)

the amount initially recognised (see paragraph 5.1.1) less, when appropriate, the cumulative amount of income recognised in accordance with the principles of IFRS 15.

(d)

commitments to provide a loan at a below-market interest rate. An issuer of such a commitment shall (unless paragraph 4.2.1(a) applies) subsequently measure it at the higher of:

(i)

the amount of the loss allowance determined in accordance with Section 5.5 and

(ii)

the amount initially recognised (see paragraph 5.1.1) less, when appropriate, the cumulative amount of income recognised in accordance with the principles of IFRS 15.

(e)

contingent consideration recognised by an acquirer in a business combination to which IFRS 3 applies. Such contingent consideration shall subsequently be measured at fair value with changes recognised in profit or loss.

Option to designate a financial liability at fair value through profit or loss U.K.

4.2.2. An entity may, at initial recognition, irrevocably designate a financial liability as measured at fair value through profit or loss when permitted by paragraph 4.3.5, or when doing so results in more relevant information, because either: U.K.

(a)

it eliminates or significantly reduces a measurement or recognition inconsistency (sometimes referred to as ‘ an accounting mismatch ’ ) that would otherwise arise from measuring assets or liabilities or recognising the gains and losses on them on different bases (see paragraphs B4.1.29–B4.1.32); or

(b)

a group of financial liabilities or financial assets and financial liabilities is managed and its performance is evaluated on a fair value basis, in accordance with a documented risk management or investment strategy, and information about the group is provided internally on that basis to the entity's key management personnel (as defined in IAS 24 Related Party Disclosures ), for example, the entity's board of directors and chief executive officer (see paragraphs B4.1.33–B4.1.36).]

Textual Amendments

F1 Inserted by Commission Regulation (EU) 2016/2067 of 22 November 2016 amending Regulation (EC) No 1126/2008 adopting certain international accounting standards in accordance with Regulation (EC) No 1606/2002 of the European Parliament and of the Council as regards International Financial Reporting Standard 9 (Text with EEA relevance).