MCCU Annual Report - page 58

Adoption of Standards, Interpretation and Amendments (cont'd):
IAS 32 Financial Instruments: Presentation (Amendments) (Effective January 2014)
The objective of this amendment to IAS 32 is to clarify certain aspects because of diversity in application
of the requirements on offsetting, focused on four main areas: i) the meaning of 'currently has a legally
enforceable right of set-off'; ii) the application of simultaneous realisation and settlement; iii) the
offsetting of collateral amounts; and iv) the unit of account for applying the offsetting requirements.
At the date of the approval of the financial statements, the following Standards and Interpretations which
are considered relevant to the Credit Union were issued but not yet effective:
IFRS 9: Financial Instruments - Part 1: Classification and Measurement and Classification of
Financial Instruments (Effective January 2015)
IAS 36: Impairment of Assets (Effective January 2014)
- Amends IAS 36 Impairment of Assets to
reduce the circumstances in which the recoverable amount of assets or cash-generating units is
required to be disclosed, clarify the disclosures required, and to introduce an explicit requirement to
disclose the discount rate used in determining impairment (or reversals) where recoverable amount
(based on fair value less costs of disposal) is determined using a present value technique.
These will affect the financial statements for accounting periods beginning on or after the first day of the
months stated. The adoption of these standards and amendments is not expected to have a material
impact on these financial statements.
All equity instruments are to be measured subsequently at fair value through profit or loss. For all other
equity investment, an irrecoverable election can be made at initial recognition, to recognise unrealised
and realised fair value gains and losses through other comprehensive income rather than profit or loss.
There is to be no recycling of fair value gains and losses to profit or loss. This election may be made on
an instrument-by-instrument basis. Dividends are to be presented in profit or loss as long as they
represent a return on investment.
Management has determined that the standard is relevant to existing policies for current operations, but
has not yet assessed the impact on adoption.
An instrument is subsequently measured at amortised cost only if it is a debt instrument and both the
objective of the entity's business model is to hold the asset to collect the contractual cash flows, and the
asset's contractual cash flows represent only payments of principal and interest (that is, it has only 'basic
loan features'). All other debt instruments are to be measured at fair value through profit or loss.
Financial assets are required to be classified into two measurement categories: those to be measured
subsequently at fair value and those to be measured subsequently at amortised cost. The decision is to be
made at initial recognition. The classification depends on the entity's business model for managing its
financial instruments and contractual cash flow characteristics of the instrument.
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