Improvements to IFRSs – Volume 11

IFRS 1 – First-time Adoption of International

Financial Reporting Standards

This amendment slightly changes the wording of paragraph B6 of IFRS 1 to improve consistency with the rules on hedge accounting set out in IFRS 9. Cross-references to IFRS 9 have also been added to paragraphs B5 and B6 of IFRS 1.

IFRS 7 – Financial Instruments: Disclosures

Gain or loss on derecognition

This amendment updates an obsolete crossreference in paragraph B38 of IFRS 7.

Introduction

This amendment clarifies that the application guidance does not necessarily illustrate all the requirements in the referenced paragraphs of IFRS 7.

Disclosures on differences between fair value and transaction price

This amendment changes the wording of paragraph IG14 to bring it into line with the wording and concepts used in IFRS 13 – Fair Value Measurement (the wording of paragraph 28 of IFRS 7, which IG14 refers to, was changed when IFRS 13 was published in May 2011).

Credit risk disclosures

This amendment changes the wording of paragraph IG20B to simplify the explanation of which aspects are not illustrated.

IFRS 9 – Financial Instruments

Derecognition of lease liabilities

This amendment clarifies that, when a lessee derecognises a lease liability in accordance with IFRS 9, paragraph 3.3.3 of IFRS 9 applies (i.e. the lessee recognises a gain or loss in profit or loss).

Transaction price

This amendment removes an inconsistency between paragraph 5.1.3 of IFRS 9 and the requirements of IFRS 15 (the wording “their transaction price (as defined in IFRS 15)” has been replaced by “the amount determined by applying IFRS 15”).

IFRS 10 – Consolidated Financial Statements

This amendment changes paragraph B74 to clarify that the relationship described is only one example of a situation in which judgement must be used to determine whether a party is acting as a “de facto agent”.

IAS 7 – Statement of Cash Flows

This amendment slightly alters paragraph 37 of IAS 7 – Statement of Cash Flows by replacing the phrase “cost method” with “at cost”. The definition of the cost method was removed in May 2008, on publication of Cost of an Investment in a Subsidiary, Jointly Controlled Entity or Associate, but the term had remained in paragraph 37 of IAS 7 until now.

Effective date and transition provisions

The amendments above will be mandatory for financial periods beginning on or after 1 January 2026. However, early application is permitted.

An entity shall apply the amendment on the derecognition of lease liabilities to lease liabilities that are extinguished on or after the beginning of the annual reporting period in which the entity first applies that amendment. There are no transition provisions for any of the other amendments.