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Urgent Omnibus amendment to AASBs 7 and 139
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AASB 2008-10 Amendments to Australian Accounting Standards – Reclassification of Financial Assets (pdf) was issued in response to the global economic downturn. 
 
As foreshadowed in ANT40/2008, the revisions allow non derivative financial assets held for trading and available-for-sale assets to be reclassified in particular situations. They are designed to address differences arising between IFRS and US GAAP in this area which are causing concern in the current economic climate and apply from 1 July 2008. They cannot be applied to financial reporting periods that ended before that date. 
 
The amendments to AASB 139 permit an entity to:

  1. reclassify non-derivative financial assets (other than those designated at fair value through profit or loss by the entity upon initial recognition) out of the fair value through profit or loss category when the financial asset is no longer held for the purpose of selling or repurchasing in the near future, and either of the following apply:
    1. there are rare circumstances; or
      2.  
    2. it would have met the definition of loans and receivables (if the financial asset had not been required to be held for trading at initial recognition); and
  2. transfer from the available-for-sale category to the loans and receivables category a financial asset that would have met the definition of loans and receivables (if the financial asset had not been designated as available for sale), if the entity has the intention and ability to hold that financial asset for the foreseeable future.
Note that once an item is at amortised cost, any future changes in expected cash flows will be recognised as an adjustment to the effective interest rate and thereby be reflected in the profit or loss over the remaining holding period.  
 
For further details see http://www.aasb.com.au/News.aspx?newsID=1627. 
 
This article was taken from ANT41/2008 and is current up to 24 October 2008 
 
IASB urgently amends IAS 7 and 39 
As part of the IASB’s response to the global economic downturn the IASB has issued Reclassifications of Financial Assets (Amendments to IAS 39 Financial Instruments: Recognition and Measurement and IFRS 7 Financial Instruments: Disclosures. The revisions allow non derivative financial assets held for trading and available for sale assets to be reclassified in particular situations. They are designed to address differences arising between IFRS and US GAAP in this area which are causing concern in the current economic climate. 
 
The changes to IAS 39 amend paragraphs 50 and AG8 and add paragraphs 50B-50F and I03G while the changes to IAS 7 amend paragraph 12 and add paragraph 12A. The amendments apply from 1 July 2008 and cannot be applied retrospectively to financial reporting periods that were completed prior to 1 July 2008.  
 
The amending standard is available for download on the IASB website (pdf). 
 
A full media release is also available online (pdf).