An enterprise should measure loans and receivables that it has originated and that are not held for trading at amortised cost, less reductions for impairment or uncollectibility. The enterprise need not demonstrate an intent to hold originated loans and receivables to maturity. After acquisition most financial liabilities are measured at original recorded amount less principal repayments and amortisation. For this purpose, derivatives are always deemed held for trading unless they are designated as hedging instruments. IAS 39 requires that an impairment loss be recognised for a financial asset whose recoverable amount is less than carrying amount.
Guidance is provided for calculating impairment.
IAS 39 establishes conditions for determining when control over a financial asset or liability has been transferred to another party. If part of a financial asset or liability is sold or extinguished, the carrying amount is split based on relative fair values. Hedge accounting is permitted under IAS 39 in certain circumstances, provided that the hedging relationship is clearly defined, measurable, and actually effective. Hedge accounting is permitted only if an enterprise designates a specific hedging instrument as a hedge of a change in value or cash flow of a specific hedged item, rather than as a hedge of an overall net balance sheet position. However, the approximate income statement effect of hedge accounting for an overall net position can be achieved, in some cases, by designating part of one of the underlying items as the hedged position.