Embedded derivative separation: non closely related components must be accounted for separately with fair value changes in profit or loss. An embedded derivative-part of a hybrid contract with cash flows that vary like a derivative-must be separated and accounted for as a financial instrument when its economic characteristics and risks are not closely related to those of the host, a standalone instrument with the same terms would qualify as a derivative, and the hybrid contract is not measured at fair value through profit or loss. Specific exceptions apply to call, put and prepayment options in debt or insurance hosts and to certain embedded foreign currency derivatives; separated embedded forwards are initially measured at zero fair value and subsequent changes flow through profit or loss.
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Provisions expressly mentioned in the judgment/order text.
Embedded derivative separation: non closely related components must be accounted for separately with fair value changes in profit or loss.
An embedded derivative-part of a hybrid contract with cash flows that vary like a derivative-must be separated and accounted for as a financial instrument when its economic characteristics and risks are not closely related to those of the host, a standalone instrument with the same terms would qualify as a derivative, and the hybrid contract is not measured at fair value through profit or loss. Specific exceptions apply to call, put and prepayment options in debt or insurance hosts and to certain embedded foreign currency derivatives; separated embedded forwards are initially measured at zero fair value and subsequent changes flow through profit or loss.
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