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  • IAS 39 PAPER – No. 5
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Taking into consideration the absence of specific IAS guidance with respect to
assessment of whether a non-financial item is “Readily Convertible to Cash” or not, the industry has established its own list of criteria per type of commodity. This criteria list finds its inspiration among others within US GAAP guidance i.e. footnote 5 of SFAS 133, DIG-A 10 and DIG A-21. The criteria consider the assets characteristics, market criteria, the cost of conversion of an asset to cash and individual contract features in the context of its market. Due to the diversity of assets, markets, contracts and unique contractual terms, each company must perform its own assessment to determine whether an asset under a contract is RCC, however this should be within the framework laid out in this paper.

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