WILLAS-ARRAY ELECTRONICS (HOLDINGS) LIMITED
70
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED MARCH 31, 2016
2.
APPLICATION OF INTERNATIONAL FINANCIAL REPORTING STANDARDS
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IFRS 9 Financial Instruments
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Key requirements of IFRS 9 are described as follows:
• all recognised financial assets that are within the scope of IAS 39
Financial Instruments:
Recognition and Measurement
are subsequently measured at amortised cost or fair value.
Specifically, debt investments that are held within a business model whose objective is
to collect the contractual cash flows, and that have contractual cash flows that are solely
payments of principal and interest on the principal outstanding are generally measured at
amortised cost at the end of subsequent accounting periods. Debt instrument that are held
within a business model whose objective is achieved both by collecting contractual cash
flows and selling financial assets, and that have contractual terms that give rise on specified
dates to cash flows that are solely payments of principal and interest on the principal amount
outstanding, are measured at FVTOCI. All other debt investments and equity investments are
measured at their fair values at the end of subsequent accounting periods. In addition, under
IFRS 9, entities may make an irrevocable election to present subsequent changes in the fair
value of an equity investment (that is not held for trading) in other comprehensive income,
with only dividend income generally recognised in profit or loss.
• with regard to the measurement of financial liabilities designated as at fair value through
profit or loss, IFRS 9 requires that the amount of change in the fair value of the financial
liability that is attributable to changes in the credit risk of that liability is presented in other
comprehensive income, unless the recognition of the effects of changes in the liability’s
credit risk in other comprehensive income would create or enlarge an accounting mismatch
in profit or loss. Changes in fair value attributable to changes in the financial liabilities’ credit
risk are not subsequently reclassified to profit or loss. Under IAS 39, the entire amount of the
change in the fair value of the financial liability designated as fair value through profit or loss
is presented in profit or loss.
• in relation to the impairment of financial assets, IFRS 9 requires an expected credit loss
model, as opposed to an incurred credit loss model under IAS 39. The expected credit
loss model requires an entity to account for expected credit losses and changes in those
expected credit losses at each reporting date to reflect changes in credit risk since initial
recognition. In other words, it is no longer necessary for a credit event to have occurred
before credit losses are recognised.
