EFRAG assessment of IFRIC 16 Hedges of a Net Investment in a Foreign Operation
18 September 2008
EFRAG consults on the endorsement for use in the EU of the IFRIC 16 - Hedges of a Net Investment in a Foreign Operation.
EFRAG requests comments relating to the endorsement for use in the EU of the IFRIC 16 - Hedges of a Net Investment in a Foreign Operation. It is consulting both on its assessment of IFRIC 16 against the EU endorsement criteria and on its initial assessment of the costs and benefits that would arise from the implementation of IFRIC 16 in the EU.
Deadline for comments is 20 October 2008.
IFRIC 16 clarifies various aspects of IAS 21 and IAS 39. It focuses in particular on:
- When an entity has a presentation currency that is different from its functional currency, do the foreign exchange differences that arise represent a hedgeable risk?
- When there are immediate, intermediate and ultimate parent entities, which exchange rates represent hedgeable risks?
- Does it matter, for hedge accounting purposes, which entity is holding the hedging instrument being used to hedge a net investment in a foreign operation?
- What amounts should be reclassified from OCI to profit or loss as reclassification adjustments on disposal of the foreign operation?
Invitation to Comment
© EFRAG - European Financial Reporting Advisory Group
