WG 60 Financial Instruments: Recognition & Measurement

Chairman: Dato’ Megat Iskandar Shah; Project Manager: Mr. Kelvin Lee

WG 60 was responsible for issuing MASB ED 63 Amendments to Standards on Financial Instruments which comprise of:

(1) Amendments to FRS 132 Financial Instruments: Presentation and MASB ED 61 Presentation of Financial Statements - Puttable Financial Instruments and Obligations Arising on Liquidation. This Amendment require some puttable financial instruments and some financial instruments that impose on the entity an obligation to deliver to another party a pro rata share of the net assets of the entity only on liquidation to be classified as equity.

(2) Amendments to FRS 139 Eligible Hedged Items. This Amendment clarify how the principles that determine whether a hedged risk or portion of cash flows that is eligible for designation should be applied in particular situations.

(3) Amendments to FRS 139 Reclassification of Financial Assets. This Amendment permits an entity to reclassify non-derivative financial assets (other than those designated at fair value through profit or loss by the entity upon initial recognition) out of the fair value through profit or loss category in particular circumstances. It also permits an entity to transfer from the available-for-sale category to the loans and receivables category a financial asset that would have met the definition of loans and receivables (if the financial asset had not been designated as available for sale), if the entity has the intention and ability to hold that financial asset for the foreseeable future.

WG 60 also reviewed IASB's draft documents on:

(1) Financial Instruments with Characteristics of Equity. This document considers the distinction between liability and asset instruments and equity instruments.

(2) Reducing Complexity in Reporting Financial Instruments. This paper discusses the main causes of complexity in reporting financial instruments and the possible intermediate and long-term approaches to improving financial reporting and reducing complexity.

(3) IFRS 7 Improving Disclosures about Financial Instruments which proposes to enhance disclosures about fair value measurements and the liquidity risk of financial instruments.