71Paragraphs 4(a), 5, 7, 9 and 10 are amended to read as follows and paragraph 14 is added:

71 Paragraphs 4(a), 5, 7, 9 and 10 are amended to read as follows and paragraph 14 is added:

4 This Interpretation addresses the following issues:

(a) Are an entity’s equity instruments issued to extinguish all or part of a financial liability ‘consideration paid’ in accordance with paragraph 3.3.3 of AASB 9?

5 The issue of an entity’s equity instruments to a creditor to extinguish all or part of a financial liability is consideration paid in accordance with paragraph 3.3.3 of AASB 9. An entity shall remove a financial liability (or part of a financial liability) from its statement of financial position when, and only when, it is extinguished in accordance with paragraph 3.3.1 of AASB 9.

7 If the fair value of the equity instruments issued cannot be reliably measured then the equity instruments shall be measured to reflect the fair value of the financial liability extinguished. In measuring the fair value of a financial liability extinguished that includes a demand feature (eg a demand deposit), paragraph 5.4.3 of AASB 9 is not applied.

9 The difference between the carrying amount of the financial liability (or part of a financial liability) extinguished, and the consideration paid, shall be recognised in profit or loss, in accordance with paragraph 3.3.3 of AASB 9. The equity instruments issued shall be recognised initially and measured at the date the financial liability (or part of that liability) is extinguished.

10 When only part of the financial liability is extinguished, consideration shall be allocated in accordance with paragraph 8. The consideration allocated to the remaining liability shall form part of the assessment of whether the terms of that remaining liability have been substantially modified. If the remaining liability has been substantially modified, the entity shall account for the modification as the extinguishment of the original liability and the recognition of a new liability as required by paragraph 3.3.2 of AASB 9.

14 AASB 2010-7 Amendments to Australian Accounting Standards arising from AASB 9 (December 2010), issued in December 2010, amended paragraphs 4(a), 5, 7, 9 and 10. An entity shall apply those amendments when it applies AASB 9 as issued in December 2010.

Amendments to Interpretation 127

72 Below the heading ‘References’, the reference to AASB 139 is deleted and a reference to AASB 9 Financial Instruments is added.