Appendix B

Exceptions to the retrospective application of other IFRSs

This appendix is an integral part of the IFRS.

B1   An entity shall apply the following exceptions:

(a)derecognition of financial assets and financial liabilities (paragraphs B2

and B3);

(b)hedge accounting (paragraphs B4-B6);

c)non-controlling interests (paragraph B7);

(e)dclassification and measurement of financial assets (paragraph B8);

(f)embedded derivatives (paragraph B9); and

government loans (paragraphs B10-B12).

B2Derecognition of financial assets and financial liabilities

Except as permitted by paragraph B3, a first-time adopter shall apply the

derecognition requirements in IFRS 9 prospectively for transactions occurring on or after the date of transition to IFRSs. For example, if a first-time adopter derecognised non-derivative financial assets or non-derivative financial liabilities in accordance with its previous GAAP as a result of a transaction that occurred before occurred before the date of transition to IFRSs, it shall not recognise those assets and liabilities in accordance with IFRSs (unless they qualify for recognition as a result of a later transaction or event).

B3Despite paragraph B2, an entity may apply the derecognition requirements in IFRS 9 retrospectively from a date of the entity's choosing, provided that the information needed to apply IFRS 9 to financial assets and financial liabilities derecognised as a result of past transactions was obtained at the time of initially accounting for those transactions.

B4Hedge accounting

As required by IFRS 9, at the date of transition to IFRSs an entity shall:

(a)        measure all derivatives at fair value; and

(b)        eliminate all deferred losses and gains arising on derivatives that were

reported in accordance with previous GAAP as if they were assets or liabilities.

B5An entity shall not reflect in its opening IFRS statement of financial position a hedging relationship of a type that does not qualify for hedge accounting in accordance with IFRS 9 (for example, many hedging relationships where the hedging instrument is a stand-alone written option or a net written option; or where the hedged item is a net position in a cash flow hedge for another risk than foreign currency risk). However, if an entity designated a net position as a hedged item in accordance with previous GAAP, it may designate as a hedged item in accordance with IFRSs an individual item within that net position, or a

net position if that meets the requirements in paragraph 6.6.1 of IFRS 9, provided that it does so no later than the date of transition to IFRSs.

If, before the date of transition to IFRSs, an entity had designated a transaction as a hedge but the hedge does not meet the conditions for hedge accounting in IFRS 9, the entity shall apply paragraphs 6.5.6 and 6.5.7 of IFRS 9 to discontinue hedge accounting. Transactions entered into before the date of transition to IFRSs shall not be retrospectively designated as hedges.

Non-controlling interests

A first-time adopter shall apply the following requirements of IFRS 10

prospectively from the date of transition to IFRSs:

(a)the requirement in paragraph B94 that total comprehensive income is

attributed to the owners of the parent and to the non-controlling interests even if this results in the non-controlling interests having a

deficit balance;

(b)the requirements in paragraphs 23 and B93 for accounting for changes

in the parent's ownership interest in a subsidiary that do not result in a

loss of control; and

(c)the requirements in paragraphs B97-B99 for accounting for a loss of control over a subsidiary, and the related requirements of paragraph 8A

of IFRS 5 Non-current Assets Held for Sale and Discontinued Operations.

However, if a first-time adopter elects to apply IFRS 3 retrospectively to past

business combinations, it shall also apply IFRS 10 in accordance with paragraph C1 of this IFRS.

Classification and measurement of financial assets