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IFRS 13: When Counterparty Risk Hits Your Bottom Line

IFRS 13 'Fair Value Measurement' came into effect from January 2013. It requires us to take into account counterparty and credit risk, part of non-performance risk, in the revaluation of financial hedging instruments.

Some important questions need to be addressed, such as: How do we calculate this risk? What reports will have to be provided and disclosed? And finally how to simulate the potential impacts on the income statement? If we think only about IFRS 9 we are forgetting this other standard applicable now.

Key Points

  • IFRS 13, the one we forgot?
  • Dealing in financial instruments
  • Measurement at ‘fair value’
  • Fair Value Hierarchy
  • Methodology
  • Calculation of CVA/DVA
  • More complex than it seems.
  • Other Calculation Methods

 

Written by

François Masquelier
Head of Corporate Finance and Treasury, RTL Group, and Honorary Chairman of the European Association of Corporate Treasurers
RTL Group

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