Embedded derivatives under FRS 102

Embedded derivatives under FRS 102

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Has anyone dealt with embedded derivatives under FRS 102 yet?

I am dealing with a bank loan with various means of swapping interest rates written into the contract.

I believe that the loan must be a non-basic financial instrument, but cannot find any guidance on the treatment of the embedded derivatives.

Should they be separated from the host contract?

By what criteria?

Should one follow IAS 39?

I should be grateful for advice from anyone who may already have dealt with this, especially if they can cite some references to suitable guidance.

Thanks for your help.

Norman Ingham

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