IDEAS home Printed from https://ideas.repec.org/a/pfq/journl/v70y2024i4p98-116.html
   My bibliography  Save this article

IFRS 9 Classification Aspects – Measurement of Sustainability-Linked Loans at Amortised Cost or Fair Value

Author

Listed:
  • Veit, Adrienn
  • Böcskei, Elvira

Abstract

Lending agreements may contain certain sustainability-linked features that can modify the contractual cash flows via the interest - shall the borrowers meet or fail to meet the objectives set by the loan agreement. IFRS 9 provides that in order to measure the financial assets at amortised cost, the primary objective of the business model in which the asset is held shall focus on the collection of the cash flows over the life of the asset and the contractual terms of the financial asset shall give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding. In other words, the contract is a basic lending agreement. At the time of the IFRS 9 implementation, commercial banks sought to measure financial assets, when possible, at amortised cost as it is more predictable and stable compared to fair value measurement. The International Accounting Standards Board is willing to amend IFRS 9 in order to ensure the true and fair view of the financial statements in respect of lending agreements with sustainability-linked features since it appears that the current regulation of IFRS 9 would result in fair value measurement rather than measurement at amortised cost. The objective of this paper is to summarise the implications of sustainability-linked features from accounting point of view by presenting the requirements of IFRS 9 with regard to classification, the application of them and the current dilemmas.

Suggested Citation

  • Veit, Adrienn & Böcskei, Elvira, 2024. "IFRS 9 Classification Aspects – Measurement of Sustainability-Linked Loans at Amortised Cost or Fair Value," Public Finance Quarterly, Corvinus University of Budapest, vol. 70(4), pages 98-116.
  • Handle: RePEc:pfq:journl:v:70:y:2024:i:4:p:98-116
    DOI: https://doi.org/10.35551/PFQ_2024_4_4
    as

    Download full text from publisher

    File URL: https://unipub.lib.uni-corvinus.hu/10839/
    Download Restriction: no

    File URL: https://libkey.io/https://doi.org/10.35551/PFQ_2024_4_4?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    More about this item

    Keywords

    sustainability; sustainability-linked loans; ESG; SPPI criterion;
    All these keywords.

    JEL classification:

    • M20 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Business Economics - - - General
    • M41 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Accounting - - - Accounting

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:pfq:journl:v:70:y:2024:i:4:p:98-116. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no bibliographic references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Adam Hoffmann (email available below). General contact details of provider: https://edirc.repec.org/data/bkeeehu.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.