Modification of financial liabilities – IFRS 9 accounting change confirmed
The IASB has confirmed the accounting for modifications of financial liabilities under IFRS 9. That is, when a financial liability measured at amortised cost is modified without this resulting in derecognition, a gain or loss should be recognised in profit or loss. The gain or loss is calculated as the difference between the original contractual cash flows and the modified cash flows discounted at the original effective interest rate. This will apply to businesses that regularly refinance debt, such as those in the property sector.