This free, guided checker walks your finance team through the key decision points for IFRS 9 Financial Asset Classification. Answer a few questions to see the likely treatment and the evidence to document.
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This tool is a high-level IFRS screening aid for general information only and is not accounting, audit or legal advice. Conclusions require entity-specific evidence and judgement - confirm the treatment with your advisor.
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Complete the scope assessment before applying business-model and contractual-cash-flow tests; prepaid share subscriptions before equity interest exists may remain IFRS 9 assets. Test control under IFRS 10.7 and significant influence under IAS 28.5-28.6, including potential voting rights that are currently exercisable. Venture capital organisations and similar funds may still measure associates at FVTPL under the IAS 28.18 election, which brings the interest back into IFRS 9 measurement mechanics.
Account for the interest under IFRS 10, IFRS 11, IAS 27, or IAS 28 as applicable; IFRS 9 classification and measurement do not apply (IFRS 9.2.1(a)).
Official guidance: IFRS issued standards
Equity instruments default to FVTPL unless an irrevocable FVOCI election is made at initial recognition; embedded derivatives in equity hosts are not bifurcated. Classify from the holder's perspective using the issuer's IAS 32 analysis: redeemable preference shares and puttable instruments that are liabilities of the issuer are debt instruments for the holder and must be tested for SPPI. Fund units and similar puttable interests generally fail the equity definition even when presented as equity by the issuer under the IAS 32.16A exception.
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Official guidance: IFRS issued standards
IPO price protection or downside collars attached to equity shares must be assessed as one combined instrument; bifurcation is not permitted for financial assets. IFRS 9.4.3.2 requires a hybrid contract with a financial-asset host to be classified in its entirety, so any derivative feature typically drags the whole instrument to FVTPL. Features that give the holder a contractual right to cash, such as guaranteed-return puts, may also mean the instrument never met the IAS 32.11 equity definition in the first place.
Measure the entire hybrid instrument at FVTPL; IFRS 9.4.3.2 prohibits separating the embedded derivative and the IFRS 9.4.1.4 FVOCI election is unavailable for non-plain equity.
Official guidance: IFRS issued standards
FVOCI election is per instrument at initial recognition and cannot be revoked when investment mandate or manager discretion changes later. Evidence the election with dated designation memos or board minutes prepared at acquisition; recreating documentation afterwards does not support the election. The election is unavailable for held-for-trading positions and for contingent consideration recognized by an acquirer in an IFRS 3 business combination (IFRS 9.4.1.4).
Measure at FVOCI with fair-value changes in OCI and no recycling on disposal for equity (IFRS 9.5.7.5; B5.7.1); dividends are generally recognized in profit or loss (IFRS 9.5.7.6). Measure the equity instrument at FVTPL; the FVOCI designation is only available at initial recognition and cannot be made retrospectively (IFRS 9.4.1.4).
Official guidance: IFRS issued standards
Use portfolio-level evidence such as reporting, compensation, risk management, and actual sales rather than an instrument-by-instrument intention. The business model is a matter of observable fact determined by key management personnel per IFRS 9.B4.1.2B, not a policy choice. Past sales matter: evaluate their frequency, value, and timing, and whether the reasons are consistent with the stated objective - sales in response to credit deterioration do not contradict hold-to-collect (IFRS 9.B4.1.3A).
Measure the asset at fair value through profit or loss because it is held within neither a hold-to-collect nor a collect-and-sell business model (IFRS 9.4.1.4; B4.1.5-B4.1.6).
Official guidance: IFRS issued standards
Interest must represent basic lending risks and costs, profit margin, and time value of money without incompatible leverage or exposure. Run a clause-by-clause review of prepayment, extension, reset, and contingent terms; a modified time value element (for example a rate reset frequency that does not match the rate tenor) requires the benchmark cash flow comparison in IFRS 9.B4.1.9B-B4.1.9D. Features that are de minimis or not genuine do not taint SPPI (IFRS 9.B4.1.18), but contractually linked tranches need the look-through test in IFRS 9.B4.1.21-B4.1.26.
The contractual cash flow condition in IFRS 9.4.1.2(b) and 4.1.2A(b) fails, so the asset must be measured at fair value through profit or loss (IFRS 9.4.1.4).
Official guidance: IFRS issued standards
Confirm the answer against the portfolio conclusion, not management's intention for a single asset. Weigh how portfolio performance is reported to key management personnel, how managers are compensated, and the frequency, value, timing, and reasons for past and expected sales (IFRS 9.B4.1.2B). A common misapplication is labelling a portfolio hold-to-collect while routinely selling to rebalance yield; recurring significant sales for reasons other than credit deterioration point to collect-and-sell (IFRS 9.B4.1.3B-B4.1.4A).
Classify the asset at amortized cost unless the fair-value option is elected to eliminate a mismatch (IFRS 9.4.1.2; 4.1.5). Classify the asset at FVOCI for a collect-and-sell model unless designated at FVTPL (IFRS 9.4.1.2A; 4.1.5).
Official guidance: IFRS issued standards
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