BCZ2.19 In the third phase of its project to replace IAS 39 with IFRS 9, the IASB considered replacing the hedge accounting requirements in IAS 39. As part of those deliberations, the IASB considered the accounting for executory contracts that gives rise to accounting mismatches in some situations. The IASB’s decision is discussed in more detail below.
BCZ2.20 Contracts accounted for in accordance with IAS 39 include those contracts to buy or sell a non-financial item that can be settled net in cash (including net settlement in another financial instrument or by exchanging financial instruments), as if the contracts were financial instruments. In addition, IAS 39 specifies that there are various ways in which a contract to buy or sell a non-financial item can be settled net in cash. For example, a contract is considered to be settleable net in cash even if it is not explicit in the terms of the contract, but the entity has a practice of settling similar contracts net in cash.
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