Annual Report 2019
Central Bank of the Republic of Armenia
3.
New accounting pronouncements (continued)
Notes to the 2019 consolidated financial statements
Interest Rate Benchmark Reform: Amendments to IFRS 9, IAS 39 and IFRS 7 (issued on 26 September 2019 and
effective for annual periods beginning on or after 1 January 2020)
Interest Rate Benchmark Reform Amendments to IFRS 9, IAS 39 and IFRS 7 includes a number of reliefs, which apply
to all hedging relationships that are directly affected by interest rate benchmark reform. A hedging relationship is affected
if the reform gives rise to uncertainties about the timing and or amount of benchmark-based cash flows of the hedged
item or the hedging instrument. As a result of interest rate benchmark reform, there may be uncertainties about the timing
and or amount of benchmark-based cash flows of the hedged item or the hedging instrument during the period before
the replacement of an existing interest rate benchmark with an alternative nearly risk-free interest rate (an RFR). This may
lead to uncertainty whether a forecast transaction is highly probable and whether prospectively the hedging relationship
is expected to be highly effective.
The amendments come into effect from 1 January 2020, but entities may choose to apply them earlier. The amendments
are not expected to have a significant impact on the Group's consolidated financial statements.
Amendments to IFRS 10 and IAS 28: Sale or Contribution of Assets between an Investor and its Associate or Joint
Venture (issued on 11 September 2014 and effective for annual periods beginning on or after a date to be determined
by the IASB)
The amendments address the conflict between IFRS 10 and IAS 28 in dealing with the loss of control of a subsidiary that
is sold or contributed to an associate or joint venture. The amendments clarify that the gain or loss resulting from the sale
or contribution of assets that constitute a business, as defined in IFRS 3, between an investor and its associate or joint
venture, is recognised in full. Any gain or loss resulting from the sale or contribution of assets that do not constitute a
business, however, is recognised only to the extent of unrelated investors' interests in the associate or joint venture.
The IASB has deferred the effective date of these amendments indefinitely, but an entity that early adopts the
amendments must apply them prospectively. The Group will apply these amendments when they become effective.
Amendments to the Conceptual Framework for Financial Reporting (issued on 29 March 2018 and effective for annual
periods beginning on or after 1 January 2020)
The revised Conceptual Framework includes a new chapter on measurement; guidance on reporting financial
performance; improved definitions and guidance - in particular the definition of a liability; and clarifications in important
areas, such as the roles of stewardship, prudence and measurement uncertainty in financial reporting.
Classification of Liabilities as Current or Non-current - Amendments to IAS 1 (issued on 23 January 2020 and effective
for annual periods beginning on or after 1 January 2022)
These narrow scope amendments clarify that liabilities are classified as either current or non-current, depending on the
rights that exist at the end of the reporting period. Liabilities are non-current if the entity has a substantive right, at the
end of the reporting period, to defer settlement for at least twelve months. The guidance no longer requires such a right
to be unconditional. Management's expectations whether they will subsequently exercise the right to defer settlement do
not affect classification of liabilities. The right to defer only exists if the entity complies with any relevant conditions as of
the end of the reporting period. A liability is classified as current if a condition is breached at or before the reporting date
even if a waiver of that condition is obtained from the lender after the end of the reporting period. Conversely, a loan is
classified as non-current if a loan covenant is breached only after the reporting date. In addition, the amendments include
clarifying the classification requirements for debt a company might settle by converting it into equity. 'Settlement' is
defined as the extinguishment of a liability with cash, other resources embodying economic benefits or an entity's own
equity instruments. There is an exception for convertible instruments that might be converted into equity, but only for
those instruments where the conversion option is classified as an equity instrument as a separate component of a
compound financial instrument.
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