EFRAG published a Discussion Paper to gather constituents’ views on recycling and impairment of equity instruments designated at fair value through other comprehensive income to develop its technical advice to the EC.
EFRAG IFRS 9 Discussion Paper on recycling and impairment of equity.pdf
The EC asked EFRAG to provide advice on whether and how the requirements in IFRS 9 on accounting for holdings of equity instruments could be improved. EFRAG published this Discussion Paper (‘DP’) to gather constituents’ views on recycling and impairment of equity instruments designated at fair value through other comprehensive income. This DP does not include phase I of the project which aimed at collecting quantitative data on the current holdings of equity instruments in Europe and their accounting treatment and investigate whether entities expect that the new accounting requirements will affect their decisions in relation to investment in equity instruments. Feedback from constituents will be considered in developing its technical advice to the EC.
The DP contains the following:
– An analysis on the relevance of recycling in the context of a long-term investment business model.
– Arguments on the conceptual relationship between recycling gains and losses on derecognition and impairment.
– A consideration on how the application problems identified with IAS 39’s impairment model for available-for-sale equity instruments could be addressed.
– An impairment model and a revaluation model but the paper does not express a preliminary view as to which, if either, of these two models is preferable.
SUMMARY OF RESPONSES
SUMMARY OF RESPONSES EFRAG IFRS 9 Discussion Paper Equity Instruments – Impairment and Recycling.pdf