![]() ![]() In January 2016 the Interpretations Committee was presented with an analysis of the comments received on the tentative agenda decision. In September 2015 the Interpretations Committee concluded that the prepaid card meets the definition of a financial liability because the entity has a contractual obligation to deliver cash and does not have an unconditional right to avoid delivering cash to settle the contractual obligation and consequently an entity would apply the guidance in IAS 39/IFRS 9 to determine when to derecognise the financial liability. In July 2014 the Interpretations Committee tentatively decided not to add the issue into its agenda. The classification is critical to determine whether the issuing entity can derecognise the liability using IAS 39 (IFRS 9) or IAS 37. When the holder redeems the card the issuer pays cash to the merchant at which the card has been redeemed. The Interpretations Committee received a request to clarify how an entity would classify (either as a financial or non-financial liability) in the financial statements the issuing of a prepaid card with specific features such as no expiry date and that the holder can only redeem the card for goods or services. ![]() Classification of the liability for a prepaid card in the issuer’s financial statements - Agenda paper 4 ![]()
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