Accounting for Related Party Financial Instruments
In December 2018, the Accounting Standards Board amended Section
3856, Financial Instruments (the "Section"), to address
concerns on the accounting for financial instruments in a related
party transaction.¹The amendments provide clarification on the
following topics:
- Initial and subsequent measurement of
related party financial instruments;
- Measurement of compound related party
financial instruments;
- Presentation of impairment and
forgiveness of related party financial assets; and
- Modification and extinguishment of
related party financial liabilities.
The amendments will result in private enterprises applying
Section 3856, Financial Instruments, for all aspects of accounting
for financial instruments (i.e., including related party financial
instruments). Private enterprises will continue to refer to Section
3840, Related Party Transactions, to determine whether the parties
in the transaction are
