Preface

Standards amended by AASB 2020-8

This Standard makes amendments to the following Australian Accounting Standards:

(a) AASB 4 Insurance Contracts (August 2015);

(b) AASB 7 Financial Instruments: Disclosures (August 2015);

(c) AASB 9 Financial Instruments (December 2014);

(d) AASB 16 Leases (February 2016); and

(e) AASB 139 Financial Instruments: Recognition and Measurement (August 2015).

These amendments arise from the issuance of International Financial Reporting Standard Interest Rate Benchmark Reform—Phase 2 by the International Accounting Standards Board (IASB) in August 2020.

Main features of this Standard

Main requirements

This Standard amends the Standards listed to help entities to provide financial statement users with useful information about the effects of the interest rate benchmark reform on those entities’ financial statements.

As a result of these amendments, an entity:

(a) will not have to derecognise or adjust the carrying amount of financial instruments for changes required by the reform, but will instead update the effective interest rate to reflect the change to the alternative benchmark rate;

(b) will not have to discontinue its hedge accounting solely because it makes changes required by the reform, if the hedge meets other hedge accounting criteria; and

(c) will be required to disclose information about new risks arising from the reform and how it manages the transition to alternative benchmark rates.

Application date

This Standard applies to annual reporting periods beginning on or after 1 January 2021. Earlier application is permitted.