40Example 9 is amended to read as follows:

40 Example 9 is amended to read as follows:

On 31 December 1999, Entity A gives a guarantee of certain borrowings of Entity B, whose financial condition at that time is sound. During 2000, the financial condition of Entity B deteriorates and at 30 June 2000 Entity B files for protection from its creditors.

This contract meets the definition of an insurance contract in AASB 4 Insurance Contracts, but is within the scope of AASB 9 Financial Instruments, because it also meets the definition of a financial guarantee contract in AASB 9. If an issuer has previously asserted explicitly that it regards such contracts as insurance contracts and has used accounting applicable to insurance contracts, the issuer may elect to apply either AASB 4 or AASB 9 to such financial guarantee contracts. AASB 4 permits the issuer to continue its existing accounting policies for insurance contracts if specified minimum requirements are satisfied. AASB 4 also permits changes in accounting policies that meet specified criteria. The following is an example of an accounting policy that AASB 4 permits and that also complies with the requirements in AASB 9 for financial guarantee contracts within the scope of AASB 9.

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Amendments to AASB 139 Amendments to AASB 139

Amendments to AASB 139

41 Paragraph 1 is deleted.

42 Paragraphs 2 and 4 are amended to read as follows:

2 This Standard shall be applied by all entities to all types of financial instruments except:

(b) rights and obligations under leases to which AASB 117 Leases applies. However:

(i) lease receivables recognised by a lessor are subject to the derecognition and impairment provisions of this Standard;

(ii) finance lease payables recognised by a lessee are subject to the derecognition provisions of this Standard; and

(iii) derivatives that are embedded in leases are subject to the embedded derivatives provisions of this Standard;

(e) rights and obligations arising under (i) an insurance contract as defined in AASB 4 Insurance Contracts, other than an issuer’s rights and obligations arising under an insurance contract that meets the definition of a financial guarantee contract in Appendix A of AASB 9, or (ii) a contract that is within the scope of AASB 4 because it contains a discretionary participation feature. However, this Standard applies to a derivative that is embedded in a contract within the scope of AASB 4 if the derivative is not itself a contract within the scope of AASB 4. Moreover, if an issuer of financial guarantee contracts has previously asserted explicitly that it regards such contracts as insurance contracts and has used accounting applicable to insurance contracts, the issuer may elect to apply either this Standard or AASB 4 to such financial guarantee contracts (see paragraphs AG4 and AG4A). The issuer may make that election contract by contract, but the election for each contract is irrevocable;