Document ID: chunk:federal_register_of_legislation:F2023C00399:body:0:p67
Version: federal_register_of_legislation:F2023C00399
Segment Type: other
Provision Reference: 
Character Range: 176184–179669

interest rate, an entity shall estimate the expected cash flows by considering all the contractual terms of the financial instrument (for example, prepayment, extension, call and similar options) but shall not consider the expected credit losses. The calculation includes all fees and points paid or received between parties to the contract that are an integral part of the effective interest rate (see paragraphs B5.4.1–B5.4.3), transaction costs, and all other premiums or discounts. There is a presumption that the cash flows and the expected life of a group of similar financial instruments can be estimated reliably. However, in those rare cases when it is not possible to reliably estimate the cash flows or the expected life of a financial instrument (or group of financial instruments), the entity shall use the contractual cash flows over the full contractual term of the financial instrument (or group of financial instruments).
expected credit losses                                      The weighted average of credit losses with the respective risks of a default occurring as the weights.
financial guarantee contract                                A contract that requires the issuer to make specified payments to reimburse the holder for a loss it incurs because a specified debtor fails to make payment when due in accordance with the original or modified terms of a debt instrument.
financial liability at fair value through profit or loss    A financial liability that meets one of the following conditions.
                                                            (a) it meets the definition of held for trading.
                                                            (b) upon initial recognition it is designated by the entity as at fair value through profit or loss in accordance with paragraph 4.2.2 or 4.3.5.
                                                            (c) it is designated either upon initial recognition or subsequently as at fair value through profit or loss in accordance with paragraph 6.7.1.
firm commitment                                             A binding agreement for the exchange of a specified quantity of resources at a specified price on a specified future date or dates.
forecast transaction                                        An uncommitted but anticipated future transaction.
gross carrying amount of a financial asset                  The amortised cost of a financial asset, before adjusting for any loss allowance.
hedge ratio                                                 The relationship between the quantity of the hedging instrument and the quantity of the hedged item in terms of their relative weighting.
held for trading                                            A financial asset or financial liability that:
                                                            (a) is acquired or incurred principally for the purpose of selling or repurchasing it in the near term;
                                                            (b) on initial recognition is part of a portfolio of identified financial instruments that are managed together and for which there is evidence of a recent actual pattern of short-term profit-taking; or
                                                            (c) is a derivative (except for a derivative that is a financial guarantee contract or a designated and effective hedging instrument).
impairment gain or loss                                     Gains or