Artículo B4.3.8. IFRS 9 Paragraph B4.3.8

The economic characteristics and risks of an embedded derivative are closely related to the economic characteristics and risks of the host contract in the following examples. In these examples, an entity does not account for the embedded derivative separately from the host contract. (a) An embedded derivative in which the underlying is an interest rate or interest rate index that can change the amount of interest that would otherwise be paid or received on an interest‑bearing host debt contract or insurance contract is closely related to the host contract unless the hybrid contract can be settled in such a way that the holder would not recover substantially all of its recognised investment or the embedded derivative could at least double the holder’s initial rate of return on the host contract and could result in a rate of return that is at least twice what the market return would be for a contract with the same terms as the host contract [ Refer: Implementation Guidance question C.10 ] . (b) An embedded floor or cap on the interest rate on a debt contract or insurance contract is closely related to the host contract, provided the cap is at or above the market rate of interest and the floor is at or below the market rate of interest when the contract is issued, and the cap or floor is not leveraged in relation to the host contract. Similarly, provisions included in a contract to purchase or sell an asset (eg a commodity) that establish a cap and a floor on the price to be paid or received for the asset are closely related to the host contract if both the cap and floor were out of the money at inception and are not leveraged. E31 (c) An embedded foreign currency derivative that provides a stream of principal or interest payments that are denominated in a foreign currency and is embedded in a host debt instrument (for example, a dual currency bond) is closely related to the host debt instrument. Such a derivative is not separated from the host instrument because IAS 21 The Effects of Changes in Foreign Exchange Rates requires foreign currency gains and losses on monetary items to be recognised in profit or loss. (d) An embedded foreign currency derivative in a host contract that is an insurance contract or not a financial instrument (such as a contract for the purchase or sale of a non‑financial item where the price is denominated in a foreign currency) is closely related to the host contract provided it is not leveraged, does not contain an option feature, and requires payments denominated in one of the following currencies: (i) the functional currency of any substantial party to that contract; (ii) the currency in which the price of the related good or service that is acquired or delivered is routinely denominated in commercial transactions around the world (such as the US dollar for crude oil transactions); E32 or (iii) a currency that is commonly used in contracts to purchase or sell non‑financial items in the economic environment in which the transaction takes place (eg a relatively stable and liquid currency that is commonly used in local business transactions or external trade). [ Note: In November 2007 the IFRS Interpretations Committee recommended the Board clarify how an entity determines the environment in which a transaction takes place for the purpose of applying paragraph AG33(d)(iii) of IAS 39 (now paragraph B4.3.8(d)(iii) of IFRS 9 ). The Board proposed, amendments to paragraph AG33(d)(iii) of IAS 39 as part of Improvements to IFRSs in August 2008. The Board did not finalise its proposal.] (e) An embedded prepayment option in an interest‑only or principal‑only strip is closely related to the host contract provided the host contract (i) initially resulted from separating the right to receive contractual cash flows of a financial instrument that, in and of itself, did not contain an embedded derivative, and (ii) does not contain any terms not present in the original host debt contract. (f) An embedded derivative in a host lease contract is closely related to the host contract if the embedded derivative is (i) an inflation‑related index such as an index of lease payments to a consumer price index (provided that the lease is not leveraged and the index relates to inflation in the entity’s own economic environment), (ii) variable lease payments based on related sales or (iii) variable lease payments based on variable interest rates. (g) A unit‑linking feature embedded in a host financial instrument or host insurance contract is closely related to the host instrument or host contract if the unit‑denominated payments are measured at current unit values that reflect the fair values of the assets of the fund. A unit‑linking feature is a contractual term that requires payments denominated in units of an internal or external investment fund. (h) A derivative embedded in an insurance contract is closely related to the host insurance contract if the embedded derivative and host insurance contract are so interdependent that an entity cannot measure the embedded derivative separately (ie without considering the host contract). [ Refer: paragraph 4.3.3(a) ]