b) If the debt instruments are held within a business model whose objective is both to collect contractual cash flows and to sell
financial assets, these debt instruments are measured at fair value through other comprehensive income (FVTOCI) and are
assessed for impairment. Interest revenue (to which the effective interest method is applied), impairment gains and losses, and
foreign exchange gains and losses are recognized in profit or loss. Other gain or loss is recognized in other comprehensive
income. When the debt instruments are derecognized or reclassified, the cumulative gain or loss previously recognized in
other comprehensive income is reclassified from equity to profit or loss.
All financial assets are measured at fair value through profit or loss, or at directly attributable transaction costs. However,
for an equity investment that is within the scope of IFRS 9 and is not held for trading, the Corporation may, on initial
recognition, make an irrevocable election to recognize this investment as at fair value through other comprehensive income
(FVTOCI), with gains and losses recognized in other comprehensive income, and only dividend income recognized in profit
or loss. No subsequent impairment assessment is required, and the cumulative gain or loss previously recognized in other
comprehensive income cannot be reclassified from equity to profit or loss.
The impairment of financial assets
IFRS 9 requires the recognition of impairment loss on financial assets using the expected credit loss model. The expected
credit loss allowance is required for financial assets measured at amortized cost, financial assets mandatorily measured at
FVTOCI, certain lease receivables, contract assets within the scope of IFRS 15 “Revenue from Contracts with Customers,”
and certain written loan commitments and financial guarantee contracts. A loss allowance for the 12-month expected credit
losses is required for a financial asset if its credit risk has not increased significantly since initial recognition. A loss allowance
for full lifetime expected credit losses is required for a financial asset if its credit risk has increased significantly since initial
recognition. However, a loss allowance for full lifetime expected credit losses is required for certain trade receivables that do
not constitute a financing transaction.
For purchased or originated credit-impaired financial assets, the Corporation takes into account the expected credit losses
on initial recognition, and these losses should be discounted using the credit-adjusted effective interest rate. Subsequently,
any changes from the initial expected credit losses are recognized as a loss allowance, with the gain or loss recognized in
profit or loss.
Hedge accounting
The main changes in hedge accounting under IFRS 9 “Financial Instruments” amended the application requirements for
hedge accounting to better reflect an entity’s risk management activities. Compared with IAS 39, the main changes include
(1) broadening the range of risk components eligible for hedge accounting of non-financial items; (2) changing the way
hedging derivative instruments are accounted for to reduce profit or loss volatility; and (3) for determining the effectiveness
of a hedging relationship, replacing retrospective effectiveness testing with a testing of economic relationship between the
hedging instrument and the hedged item.
2) Amendment to IAS 19: Amendment in 2013
The amended IAS 19 states that if contributions from employees or third parties are not linked to service, these contributions
affect the remeasurement of the net defined benefit liability (asset). If the contributions are linked solely to service, the
employees’ service rendered in that period in which they are paid, these contributions may be recognized as a reduction
of service cost in the same period. If the contributions depend on the number of years of service, an entity is required to
attribute these contributions to service periods as a reduction of service cost.
3) Amendment to IAS 36 “Recoverable Amount Disclosures for Non-financial Assets”
In issuing IFRS 13 “Fair Value Measurement”, the IASB made consequential amendment to the disclosure requirements in
IAS 36 “Impairment of Assets”, introducing a requirement to disclose in every reporting period the recoverable amount
of an asset or each cash-generating unit. The amendment clarifies that such disclosure of recoverable amounts is required
only when an impairment loss has been recognized or reversed during the period. Furthermore, the Corporation is required
to disclose the discount rate used in measurements of the recoverable amount based on fair value less costs of disposal
measured using a present value technique.
4) Annual Improvements to IFRSs: 2010-2012 Cycle
IFRS 8 “Operating Segments” was amended in this annual improvement.
The amended IFRS 8 requires an entity to disclose the judgments made by management in applying the aggregation criteria
to operating segments, including a description of the operating segments aggregated and the economic indicators assessed
in determining whether the operating segments have “similar economic characteristics”. The amendment also clarifies that a
reconciliation of the total of the reportable segments’ assets to the entity’s assets should only be provided if information on the
segments’ assets is regularly provided to the chief operating decision-maker.
