Initial application of AASB 9 (AASB7_08-15_COMPsep20_07-21)

In the reporting period that includes the date of initial application of AASB 9, the entity shall disclose the following information for each class of financial assets and financial liabilities as at the date of initial application:

(a) the original measurement category and carrying amount determined in accordance with AASB 139 or in accordance with a previous version of AASB 9 (if the entity’s chosen approach to applying AASB 9 involves more than one date of initial application for different requirements);

(b) the new measurement category and carrying amount determined in accordance with AASB 9;

(c) the amount of any financial assets and financial liabilities in the statement of financial position that were previously designated as measured at fair value through profit or loss but are no longer so designated, distinguishing between those that AASB 9 requires an entity to reclassify and those that an entity elects to reclassify at the date of initial application.

In accordance with paragraph 7.2.2 of AASB 9, depending on the entity’s chosen approach to applying AASB 9, the transition can involve more than one date of initial application. Therefore this paragraph may result in disclosure on more than one date of initial application. An entity shall present these quantitative disclosures in a table unless another format is more appropriate.

In the reporting period that includes the date of initial application of AASB 9, an entity shall disclose qualitative information to enable users to understand:

(a) how it applied the classification requirements in AASB 9 to those financial assets whose classification has changed as a result of applying AASB 9.

(b) the reasons for any designation or de-designation of financial assets or financial liabilities as measured at fair value through profit or loss at the date of initial application.

In accordance with paragraph 7.2.2 of AASB 9, depending on the entity’s chosen approach to applying AASB 9, the transition can involve more than one date of initial application. Therefore this paragraph may result in disclosure on more than one date of initial application.

In the reporting period that an entity first applies the classification and measurement requirements for financial assets in AASB 9 (ie when the entity transitions from AASB 139 to AASB 9 for financial assets), it shall present the disclosures set out in paragraphs 42L–42O of this Standard as required by paragraph 7.2.15 of AASB 9.

When required by paragraph 42K, an entity shall disclose the changes in the classifications of financial assets and financial liabilities as at the date of initial application of AASB 9, showing separately:

(a) the changes in the carrying amounts on the basis of their measurement categories in accordance with AASB 139 (ie not resulting from a change in measurement attribute on transition to AASB 9); and

(b) the changes in the carrying amounts arising from a change in measurement attribute on transition to AASB 9.

The disclosures in this paragraph need not be made after the annual reporting period in which the entity initially applies the classification and measurement requirements for financial assets in AASB 9.

When required by paragraph 42K, an entity shall disclose the following for financial assets and financial liabilities that have been reclassified so that they are measured at amortised cost and, in the case of financial assets, that have been reclassified out of fair value through profit or loss so that they are measured at fair value through other comprehensive income, as a result of the transition to AASB 9:

(a) the fair value of the financial assets or financial liabilities at the end of the reporting period; and

(b) the fair value gain or loss that would have been recognised in profit or loss or other comprehensive income during the reporting period if the financial assets or financial liabilities had not been reclassified.

The disclosures in this paragraph need not be made after the annual reporting period in which the entity initially applies the classification and measurement requirements for financial assets in AASB 9.

When required by paragraph 42K, an entity shall disclose the following for financial assets and financial liabilities that have been reclassified out of the fair value through profit or loss category as a result of the transition to AASB 9:

(a) the effective interest rate determined on the date of initial application; and

(b) the interest revenue or expense recognised.

If an entity treats the fair value of a financial asset or a financial liability as the new gross carrying amount at the date of initial application (see paragraph 7.2.11 of AASB 9), the disclosures in this paragraph shall be made for each reporting period until derecognition. Otherwise, the disclosures in this paragraph need not be made after the annual reporting period in which the entity initially applies the classification and measurement requirements for financial assets in AASB 9.

When an entity presents the disclosures set out in paragraphs 42K–42N, those disclosures, and the disclosures in paragraph 25 of this Standard, must permit reconciliation between:

(a) the measurement categories presented in accordance with AASB 139 and AASB 9; and

(b) the class of financial instrument

as at the date of initial application.

On the date of initial application of Section 5.5 of AASB 9, an entity is required to disclose information that would permit the reconciliation of the ending impairment allowances in accordance with AASB 139 and the provisions in accordance with AASB 137 to the opening loss allowances determined in accordance with AASB 9. For financial assets, this disclosure shall be provided by the related financial assets’ measurement categories in accordance with AASB 139 and AASB 9, and shall show separately the effect of the changes in the measurement category on the loss allowance at that date.

In the reporting period that includes the date of initial application of AASB 9, an entity is not required to disclose the line item amounts that would have been reported in accordance with the classification and measurement requirements (which includes the requirements related to amortised cost measurement of financial assets and impairment in Sections 5.4 and 5.5 of AASB 9) of:

(a) AASB 9 for prior periods; and

(b) AASB 139 for the current period.

In accordance with paragraph 7.2.4 of AASB 9, if it is impracticable (as defined in AASB 108) at the date of initial application of AASB 9 for an entity to assess a modified time value of money element in accordance with paragraphs B4.1.9B–B4.1.9D of AASB 9 based on the facts and circumstances that existed at the initial recognition of the financial asset, an entity shall assess the contractual cash flow characteristics of that financial asset based on the facts and circumstances that existed at the initial recognition of the financial asset without taking into account the requirements related to the modification of the time value of money element in paragraphs B4.1.9B–B4.1.9D of AASB 9. An entity shall disclose the carrying amount at the reporting date of the financial assets whose contractual cash flow characteristics have been assessed based on the facts and circumstances that existed at the initial recognition of the financial asset without taking into account the requirements related to the modification of the time value of money element in paragraphs B4.1.9B–B4.1.9D of AASB 9 until those financial assets are derecognised.

In accordance with paragraph 7.2.5 of AASB 9, if it is impracticable (as defined in AASB 108) at the date of initial application for an entity to assess whether the fair value of a prepayment feature was insignificant in accordance with paragraphs B4.1.12(c) of AASB 9 based on the facts and circumstances that existed at the initial recognition of the financial asset, an entity shall assess the contractual cash flow characteristics of that financial asset based on the facts and circumstances that existed at the initial recognition of the financial asset without taking into account the exception for prepayment features in paragraph B4.1.12 of AASB 9. An entity shall disclose the carrying amount at the reporting date of the financial assets whose contractual cash flow characteristics have been assessed based on the facts and circumstances that existed at the initial recognition of the financial asset without taking into account the exception for prepayment features in paragraph B4.1.12 of AASB 9 until those financial assets are derecognised.