IFRS 9
IFRS 9 is a set of rules that tells companies how to manage the money they get and how to report it to the people who own the company.
Imagine you have a piggy bank where you save money. Sometimes you put more money in and sometimes you take some money out. As you grow up, you will learn that you need to keep track of how much money you have in your piggy bank, so you don't spend more than you have.
IFRS 9 is like your piggy bank. Companies have to keep track of how much money they have, how much they owe, and how much money they will get in the future. This helps them know if they have enough money to pay the bills and if they can make a profit.
IFRS 9 has three parts:
1. Classification and measurement: This means that companies need to put their money into different categories based on how they will use it. This helps them keep track of the money they have and how they can use it in the future.
2. Impairment: Sometimes, companies lend money to people who can't pay it back. IFRS 9 tells companies how to account for these loans and how much money they can expect to get back. This helps them know how much money they will lose and how to prepare for it.
3. Hedge accounting: Sometimes, companies use financial products like options or futures to protect themselves against financial risks. IFRS 9 tells companies how to account for these products so they can manage their risks better.
Overall, IFRS 9 helps companies keep track of their money, know how much they can spend, and protect themselves against risks. It's like a set of rules for their piggy bank, just like you have rules for yours!
Imagine you have a piggy bank where you save money. Sometimes you put more money in and sometimes you take some money out. As you grow up, you will learn that you need to keep track of how much money you have in your piggy bank, so you don't spend more than you have.
IFRS 9 is like your piggy bank. Companies have to keep track of how much money they have, how much they owe, and how much money they will get in the future. This helps them know if they have enough money to pay the bills and if they can make a profit.
IFRS 9 has three parts:
1. Classification and measurement: This means that companies need to put their money into different categories based on how they will use it. This helps them keep track of the money they have and how they can use it in the future.
2. Impairment: Sometimes, companies lend money to people who can't pay it back. IFRS 9 tells companies how to account for these loans and how much money they can expect to get back. This helps them know how much money they will lose and how to prepare for it.
3. Hedge accounting: Sometimes, companies use financial products like options or futures to protect themselves against financial risks. IFRS 9 tells companies how to account for these products so they can manage their risks better.
Overall, IFRS 9 helps companies keep track of their money, know how much they can spend, and protect themselves against risks. It's like a set of rules for their piggy bank, just like you have rules for yours!