IFRIC 16 Hedges of a Net Investment in a Foreign Operation
Published July 2008. Effective 1 October 2008 (1 July 2009 for EU preparers).
Free to view
Financial Reporting Faculty members only
Looking for real life examples?
Financial Reporting Faculty members get free access to Company Reporting’s CR service. Company Reporting are a leading research and benchmarking service on IFRS reporting practices.
Faculty membership gives you access to a range of other resources, including the hidden premium content on this page.
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 IAS 39 must be applied to determine the amount in respect of the hedging instrument.
Which version of the interpretation?
'Which version of the interpretation?' is only available to members of the Financial Reporting Faculty. Please note that to access electronic versions of IFRS through the links in these standard trackers you need to have first logged into eIFRS.
|Annual period starts||Effective version of standard||Notes on amendments|
|On or after 1 January 2018||IFRIC 16 2019 Required Standards||Includes amendment 1|
|1 January 2016 – 31 December 2017||IFRIC 16 2017 Required Standards||Does not include the amendment|
Required Standards book for a particular year assumes that there is no early application of issued but not yet effective IFRSs; The Issued Standards book assumes early application of all issued IFRSs.
For the latest version of the interpretation, and where the amendment is to be adopted early, refer to IFRIC 16 2019 Required Standards.
Full access to details of all the amendments is only available to Financial Reporting Faculty members. Find out how to join the faculty.
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 21 March 2019.