IFRS 9 has now been applicable for over a year, but some of its
changes have often been either overseen or neglected—even
when they could have a material impact on the accounts. One of
these is the treatment of non-substantial modifications of
financial assets or financial liabilities when amending contractual
terms within a restructuring transaction. There is actually an
essential change compared to the old requirements—or,
let's rather say, IFRS 9 now provides guidance on how to treat
such modifications whereas IAS 39 did not.
How do you determine if a modification is substantial or
not?
Both IAS 39 and IFRS 9 refer to the so called "10%
test". In other words, if the net present value of the cash
flows under the modified terms including net fees—which are
not specified yet—is at least 10% different from the net
present value of the remaining cash flows under the old terms, with
the original effective interest rate (EIR) discounted for both,
then the modification
