IREIT Global
annual report 2014
For the reporting period from 1 November 2013 (date of constitution) to 31 December 2014
Notes to the
Financial Statements
2.
SIGNIFICANT ACCOUNTING POLICIES
(Continued)
(a) Basis of preparation of financial statements
(Continued)
NEW AND REVISED INTERNATIONAL FINANCIAL REPORTING STANDARDS
(Continued)
IFRS 9 Financial Instruments
(Continued)
Key requirements of IFRS 9:
•
All recognised financial assets that are within the scope of IAS 39 Financial Instruments:
Recognition and Measurement are required to be subsequently measured at amortised
cost or fair value. Specifically, debt investments that are held within a business model
whose objective is to collect the contractual cash flows, and that have contractual cash
flows that are solely payments of principal and interest on the principal outstanding
are generally measured at amortised cost at the end of subsequent accounting periods.
Debt instruments that are held within a business model whose objective is achieved
both by collecting contractual cash flows and selling financial assets, and that have
contractual terms of the financial asset give rise on specified dates to cash flows that
are solely payments of principal and interest on the principal amount outstanding, are
measured at FVTOCI. All other debt investments and equity investments are measured
at their fair value at the end of subsequent accounting periods. In addition, under IFRS
9, entities may make an irrevocable election to present subsequent changes in the fair
value of an equity investment (that is not held for trading) in other comprehensive
income, with only dividend income generally recognised in profit or loss.
•
With regard to the measurement of financial liabilities designated as at fair value
through profit or loss, IFRS 9 requires that the amount of change in the fair value of
the financial liability that is attributable to changes in the credit risk of that liability
is presented in other comprehensive income, unless the recognition of the effects of
changes in the liability’s credit risk in other comprehensive income would create or
enlarge an accounting mismatch in profit or loss. Changes in fair value attributable
to a financial liability’s credit risk are not subsequently reclassified to profit or loss.
Under IAS 39, the entire amount of the change in the fair value of the financial liability
designated as fair value through profit or loss is presented in profit or loss.
•
In relation to the impairment of financial assets, IFRS 9 requires an expected credit
loss model, as opposed to an incurred credit loss model under IAS 39. The expected
credit loss model requires an entity to account for expected credit losses and changes
in those expected credit losses at each reporting date to reflect changes in credit risk
since initial recognition. In other words, it is no longer necessary for a credit event
to have occurred before credit losses are recognised.
