lOMoARcPSD|27612663
ACC 311 – FINANCIAL INSTRUMENTS AND
MEASUREMENTS ISSUES 2025-2026
UPDATED STUDY SOLUTIONS
Downloaded by Brian kiarie ()
, lOMoARcPSD|27612663
inancial Instruments
Central Issues for Accountants
Three core issues:
○ Definition – Is the item a financial instrument (FI)?
○ Measurement – Can we reliably put a value on it? If so
○ Recognition/Disclosure – Where/how should it be presented in the
financial statements?
Key questions to ask:
○ Is this item a financial instrument?
○ If yes, can we measure it reliably (fair value)?
○ Where should it be disclosed: Balance Sheet (asset/liability/equity) or Notes?
○ Should financial assets & liabilities be offset? (strict criteria – not a focus in this course).
Measurement Issues ( How we reliably put a value on it?)
● Most Financial Instruments are measured at fair value.
● Fair value changes over time → so need to record changes.
Important question: If fair value changes, does the adjustment go to: ○
Income Statement (P&L), or will this changed amount go to ○
Other Comprehensive Income (OCI, equity)?
Standards Governing Financial Instruments
● NZ IAS 32 – Presentation (definition, classification, presentation of FIs).
● NZ IFRS 7 – Disclosures (impact on financial position/performance, risks).
● NZ IFRS 9 – Recognition & Measurement (main focus of this module).
○ Covers impairment, hedge accounting, derecognition.
○ Replaced IAS 39 (difficult, contributed to lack of transparency in 2008 GFC).
● NZ IFRS 13 – Defines fair value, framework for measuring it.
Background – Why IFRS 9 was Developed
IAS 39 was:
○ Complex, hard to understand/interpret (only specialists really understood it).
○ Criticized after the 2008 Global Financial Crisis → poor disclosure of risks in financial instruments
(especially banks).
SO IASB responded by issuing IFRS 9 (effective 2018, updated 2019).
Downloaded by Brian kiarie ()
ACC 311 – FINANCIAL INSTRUMENTS AND
MEASUREMENTS ISSUES 2025-2026
UPDATED STUDY SOLUTIONS
Downloaded by Brian kiarie ()
, lOMoARcPSD|27612663
inancial Instruments
Central Issues for Accountants
Three core issues:
○ Definition – Is the item a financial instrument (FI)?
○ Measurement – Can we reliably put a value on it? If so
○ Recognition/Disclosure – Where/how should it be presented in the
financial statements?
Key questions to ask:
○ Is this item a financial instrument?
○ If yes, can we measure it reliably (fair value)?
○ Where should it be disclosed: Balance Sheet (asset/liability/equity) or Notes?
○ Should financial assets & liabilities be offset? (strict criteria – not a focus in this course).
Measurement Issues ( How we reliably put a value on it?)
● Most Financial Instruments are measured at fair value.
● Fair value changes over time → so need to record changes.
Important question: If fair value changes, does the adjustment go to: ○
Income Statement (P&L), or will this changed amount go to ○
Other Comprehensive Income (OCI, equity)?
Standards Governing Financial Instruments
● NZ IAS 32 – Presentation (definition, classification, presentation of FIs).
● NZ IFRS 7 – Disclosures (impact on financial position/performance, risks).
● NZ IFRS 9 – Recognition & Measurement (main focus of this module).
○ Covers impairment, hedge accounting, derecognition.
○ Replaced IAS 39 (difficult, contributed to lack of transparency in 2008 GFC).
● NZ IFRS 13 – Defines fair value, framework for measuring it.
Background – Why IFRS 9 was Developed
IAS 39 was:
○ Complex, hard to understand/interpret (only specialists really understood it).
○ Criticized after the 2008 Global Financial Crisis → poor disclosure of risks in financial instruments
(especially banks).
SO IASB responded by issuing IFRS 9 (effective 2018, updated 2019).
Downloaded by Brian kiarie ()
