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Financial Instruments – Alternative settlement outcomes

Financial Instruments – Alternative settlement outcomes

This IFRS newsletter reports on the IASB’s October discussions on financial instruments.


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We report on the IASB’s latest discussions on its project on financial instruments with characteristics of equity.

Further progress has been made in exploring the classification of claims with alternative settlement outcomes.

The discussions continue…

At its October meeting, the Board discussed claims where the issuing entity can choose between alternative settlement outcomes and considered whether economic incentives should affect the classification. 


“Broader consideration of economic incentives in the classification of claims with alternative settlement outcomes would represent a significant change from current practice.”

Chris Spall

KPMG’s global IFRS financial instruments leader


The macro hedge accounting project was not discussed during the October meeting.

For more detail on these discussions, read Issue 33 of our IFRS Newsletter: Financial Instruments.

Next steps for the project

The next steps for the project will be to consider the:

  • classification of instruments meeting the existing puttables exception;
  • accounting for alternative settlement outcomes that are contingent on events beyond the control of both parties;
  • substance of rights and obligations in contracts and their interaction with legal and regulatory requirements; and
  • recognition, derecognition and reclassification of equity instruments.

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