IFRIC published proposed guidance on reassessment of embedded derivatives

31 March 2005

The International Financial Reporting Interpretations Committee (IFRIC) released for public comment a draft Interpretation: D15 Reassessment of Embedded Derivatives. The proposed Interpretation has been developed to clarify certain aspects of the accounting for embedded derivatives under IAS 39.

International Accounting Standard 39 requires an entity to assess whether any embedded derivatives contained in the contract are required to be separated from the host contract and accounted for as derivatives under the Standard.

The draft Interpretation proposes guidance on the following:

Does IAS 39 require such an assessment to be made only when the entity first becomes a party to the contract, or should the assessment be reconsidered throughout the life of the contract?

Should a first-time adopter make its assessment on the basis of the conditions that existed when the entity first became a party to the contract, or those prevailing when the entity adopts IFRSs for the first time?

The proposals are open for public comment until 31 May 2005.

Press release

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