Global Standards for the world economy

Tuesday 18 December 2018

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IAS 39 Financial Instruments: Recognition and Measurement—Separation of an embedded interest rate floor


 Work in Progress – Agenda Decision

IAS 39 Financial Instruments: Recognition and Measurement—Separation of an embedded interest rate floor from a floating rate host contract in a negative interest rate environment

The Interpretations Committee received a request to clarify the application of the embedded derivative requirements of IAS 39 Financial Instruments: Recognition and Measurement in a negative interest rate environment. Specifically, the Interpretations Committee considered:

  1. whether paragraph AG33(b) of IAS 39 should apply to an embedded interest rate floor in a floating rate host debt contract in a negative interest rate environment; and
  2. how to determine the ‘market rate of interest’ referred to in that paragraph.

Project stages

Deliberations

In January 2016, the IFRS IC decided to finalise its tentative agenda decision not to take this issue onto its agenda.