IFRS 9 Financial Instruments
Practical checklist - 2025 Edition
1 Scope:
All types of financial instruments except:
Exclude: entity’s own equity instruments; interests in
subsidiaries, associates, or joint ventures (refer to IFRS
Does IFRS 9 10, IAS 27, IAS 28); rights and obligations resulting
apply? from leases (IFRS 16), insurance contracts (IFRS 17),
employee benefit plans (IAS 19) and share-based
payments arrangements (IFRS 2).
2 Initial
Recognition
Are financial instruments recognized only when the
entity becomes a party to the contractual provisions?
3 Have you applied both:
Business model test;
Classification of SPPI test (solely payments of principal and interest)?
Financial Assets Based on the above, are assets correctly classified as:
At amortized cost;
At FVOCI;
At FVTPL (default or voluntary designation)?
If ESG-linked cash flows exist, have you assessed
consistency with SPPI rules?
4 Are financial liabilities correctly classified as:
Measured at amortized cost;
Classification of FVTP (including derivatives)?
Financial Have you accounted separately for:
Liabilities Financial guarantee contracts;
Loan commitments at below-market rate;
Contingent consideration (IFRS 3)?
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IFRS 9 Financial Instruments
Practical checklist - 2025 Edition
5 Financial assets:
Is the asset classified at FVTPL?
Initial YES → Expense transaction costs immediately
Measurement NO → Add transaction costs to the initial carrying
amount
Can the fair value be reliably determined?
YES → Use quoted prices or valuation techniques
based on observable inputs (refer to IFRS 13)
NO → Consider using cost only if it’s the best
estimate of fair value at initial recognition (rare)
Financial liabilities:
Is the liability classified at FVTPL?
YES → Expense transaction costs immediately
NO → Add transaction costs to the initial carrying
amount
Special considerations:
Trade receivables without significant financing
component → At transaction price
Financial assets/liabilities acquired in a business
combination → At fair value on acquisition date
Hybrid financial instruments → Separate embedded
derivatives if required and measure each part
appropriately (see below)
6 Subsequent
Financial assets:
Classified at amortized cost:
Measurement Use effective interest method (EIR)
Recognize interest income in profit or loss using EIR
(part 1) Assess expected credit loss (see below)
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IFRS 9 Financial Instruments
Practical checklist - 2025 Edition
6 Subsequent
Financial assets:
Debt instruments classified at fair value through
other comprehensive income (FVOCI):
Measurement Recognize interest income in profit or loss using EIR
Assess expected credit loss (see below), recognize
(part 2) in profit or loss
Recognize fair value changes in OCI
On derecognition, reclassify cumulative gains or
losses from OCI to profit or loss.
Equity instruments classified at fair value through
other comprehensive income (FVOCI):
Recognize all gains or losses in OCI, do not
reclassify to profit or loss (no recycling)
Recognize dividends in profit or loss
Classified at fair value through profit or loss (FVTPL):
Recognize all changes in fair value in profit or loss
Financial liabilities:
Classified at amortized cost:
Use effective interest method (EIR)
Recognize interest expense in profit or loss using EIR
Classified at fair value through profit or loss (FVTPL):
Recognize all changes in fair value in profit or loss,
except:
For own credit risk on designated liabilities →
recognize in OCI + no recycling to profit or loss
on derecognition
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IFRS 9 Financial Instruments
Practical checklist - 2025 Edition
7 Impairment of Is the financial asset subject to ECL model?
YES: trade receivables, contract assets (IFRS 15),
lease receivables (IFRS 16), debt instruments at
Financial Assets amortized cost, debt instruments at FVOCI
NO: Equity instruments at FVOCI, all financial
(Expected Credit assets at FVTPL
Loss) Which approach applies?
Default: General (3-stage) model
Mandatory for trade receivables without significant
financing component, lease receivables and
contract assets: Simplified model
If using general model, have you identified stage?
Stage 1: Performing - 12-month ECL
Stage 2: Significant credit deterioration - lifetime
ECL
Stage 3: Credit impaired - lifetime ECL, interest on
net carrying amount
Are you using forward-looking information?
Macro factors (e.g. unemployment rate, GDP)
Multiple scenarios considered
Consistent with other forecasts used internally
Have you estimated key ECL components?
ECL = PD (probability of default) x EAD (exposure at
default) x LGD (loss given default)
If using simplified model:
Recognize lifetime ECL from day 1
Use provision matrix or historical loss data
Group receivables based on risk characteristics
Have you reviewed for write-offs?
Asset is written off when no reasonable expectation
of recovery
Gross carrying amount and loss allowance reduced
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IFRS 9 Financial Instruments
Practical checklist - 2025 Edition
8 Embedded
Have you identified any contracts that combine a
non-derivative host with a derivative feature?
Have you reviewed contracts such as convertible
derivatives bonds, structured loans, lease or service contracts
with FX/inflation clauses?
If the host contract is a financial asset within the
scope of IFRS 9 → Do not separate the embedded
derivative; treat the whole instrument under IFRS 9
Is the host contract a financial liability or a non-
financial contract (e.g. lease, service)? → Continue
below
Are the separation criteria met?
Embedded derivative not closely related to the host
contract
Embedded derivative meets the definition of a
derivative on its own
Embedded derivative can be measured reliably
YES: Separate the embedded derivative and account
for it under IFRS 9 + measure the host contract
under the appropriate standard (e.g. IFRS 16, IAS 38)
NO: Do not separate + account for entire hybrid
contract based on classification of host
Embedded derivative measured at fair value? (if not
possible, measure entire hybrid contract at FVTPL)
9 Hedge
Is hedge accounting formally elected (it is optional)?
Is hedging instrument an eligible derivative (or non-
derivative for FX risk?)
Accounting
Is the hedged item a recognized asset/liability, firm
commitment, or forecast transaction?
(part 1) Did you prepare proper hedge accounting
documentation at the inception?
Include: documentation of relationship and risk
management strategy, identification of hedged risk
and instruments, documentation of effectiveness
assessment method
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IFRS 9 Financial Instruments
Practical checklist - 2025 Edition
9 Hedge
Are the hedge effectiveness criteria met?
Economic relationship, value changes not
dominated by the credit risk, hedge ratio aligned
Accounting with risk management
Monitor effectiveness on an ongoing basis and
(part 2) rebalance the hedge ratio (if needed)
Discontinue hedge accounting if eligibility or purpose
no longer holds
10 Related IFRS IAS 32 Financial Instruments: Presentation
Defines financial instruments, distinction between
liabilities and equity
Accounting
IFRS 7 Financial Instruments: Disclosures
Standards
Disclosure of risks, fair values, impairment and
hedge accounting
Cross-check IFRS 13 Fair Value Measurement
Fair value measurement principles for all IFRS
IFRS 15 Revenue from Contracts with Customers
Contract assets subject to ECL under IFRS 9
IFRS 16 Leases
Lease receivables subject to ECL under IFRS 9
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