International Accounting Standards Board Issues Discussion Paper to Simplify Financial Instrument Reporting

  • IASB discussion paper identifies varying methods and rules as main cause of complexity in financial reporting.
  • Paper proposes revised reporting standards and seeks to replace IAS 39.
  • Paper suggests intermediate and long term approaches to problems related to financial instrument measurement.
  • Suggested interim approaches include simplifying measurement requirements; replacing existing requirements with fair value measurement principles; and simplifying or eliminating hedge accounting requirements.
  • Single, uniform fair value measurement method - appropriate for all types of financial instruments - urged as the most promising long term solution.
  • Cost-based measurement method rejected for failing to provide information about future cash-flow prospects.

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