UITF Abstract 42 (IFRIC 9) Reassessment of Embedded Derivatives

UITF Abstract 42 has been superseded by FRS 102 The Financial Reporting Standard applicable in the UK and Republic of Ireland for accounting periods beginning on or after 1 January 2015. For more information visit:

• icaew.com/newukgaap

Synopsis

UITF Abstract 42 is equivalent to IFRIC Interpretation 9.

FRS 26 requires that an entity, upon initially becoming party to a hybrid contract, assesses whether embedded derivatives should be separated from the host contract and accounted for separately.

This Abstract clarifies that subsequent reassessment is prohibited unless the terms of the hybrid contract change such that cash flows are modified.

It also clarifies that en entity adopting IFRS for the first time should assess whether any embedded derivative should be separated on the basis of conditions that existed at the date it first became party to the contract. If a subsequent change in the contract has since modified the cash flows, the conditions at the date of the change should instead be used as the basis of assessment.

• Read UITF Abstract 42 (PDF 83KB/8 pages) 

Last updated 21 June 2015