Does the financial instrument have an equity component?
Subsequent measurement
YES
1
Determine fair value of entire liability component (consider if there is an embedded derivative - Step 1A)
2
Determine deffered tax liability (See example 4 of Appendix B of IAS 12)
3
Allocate residual to equity component (IAS 32.31)
4
Equity component is not subsequently remeasured
NO
1A
Determine whether the liability component contains an embedded derivative (IAS 39.10)
NO
YES
Has the entire liability been designated as fair value through profit and loss ((FVTPL) per IAS 39.11A-13)
5
Determine fair value of embedded derivatives for initial measurement
6
Allocate residual to host liability
YES
NO
Liability is subsequently measure at fair value (IAS 39.47 (a))
Embededded derivatives subsequently measured at fair value
Host liability subsequently measured at amoritized cost
Does the financial instrument have an equity component?
NO
Subsequent measurement
YES
1
Determine fair value of entire liability component (consider if there is an embedded derivative - Step 1A)
2
Determine deffered tax liability (See example 4 of Appendix B of IAS 12)
3
Allocate residual to equity component (IAS 32.31)
4
Equity component is not subsequently remeasured
1A
Determine whether the liability component contains an embedded derivative (IAS 39.10)
NO
Has the entire liability been designated as fair value through profit and loss ((FVTPL) per IAS 39.11A-13)
5
Determine fair value of embedded derivatives for initial measurement
6
Allocate residual to host liability
Liability is subsequently measure at fair value (IAS 39.47 (a))
NO
Host liability subsequently measured at amoritized cost
Embededded derivatives subsequently measured at fair value
YES
YES