IFRIC 16 Hedges of a Net Investment in a Foreign Operation
Published July 2008. Effective 1 October 2008 (1 July 2009 for EU preparers).
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IFRIC 16 provides guidance on three main issues:
Foreign currency risk
A parent company may designate as a hedged risk only those exchange differences which arise from a foreign operation using a different functional currency from its own. The presentation currency does not expose an entity to risks which may be hedged.
The hedging instrument in a hedge of a net investment in a foreign operation may be held by any entity or entities within the group.
Reclassification adjustments on disposal of the investment
IFRIC 16 requires that IAS 21 should be applied to determine the amount which is reclassified to profit or loss in respect of the hedged item and IFRS 9 must be applied to determine the amount in respect of the hedging instrument.
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|Annual period starts||Effective version of standard||Notes on amendments|
|On or after 1 January 2018||IFRIC 16 2021 Required Standards||Includes amendment 1|
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1. IFRS 9 Financial Instruments amendment to IFRIC 16
Effective for annual periods beginning on or after 1 January 2018. Earlier application is permitted.
IFRS 9 amends IFRIC 16 to refer to IFRS 9 and its requirements rather than IAS 39.
IFRSs referred to by IFRIC 16
This page was last updated 22 January 2021.