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FRS 109 and FRS 107 Amendments: Classification and Measurement of Financial Instruments (Effective 2026)

Amendments to the financial instruments standards take effect for financial years beginning on or after 1 January 2026, so they apply to many companies’ FY2026 financial statements. Issued by the Accounting Standards Committee (ASC) in October 2024 as Amendments to the Classification and Measurement of Financial Instruments, they amend FRS 109 and FRS 107 (and SFRS(I) 9 and SFRS(I) 7 for listed entities), mirroring the IASB’s changes to IFRS 9 and IFRS 7.

1. When Is a Payment Derecognised?

The amendments clarify that financial assets and liabilities are derecognised on the settlement date, that is, when the cash is actually received or paid.

There is an optional exception for payments made through an electronic payment system. A company may derecognise a trade payable before the cash leaves its account if all of these conditions are met:

  1. it has no practical ability to withdraw, stop or cancel the payment instruction;
  2. it has no practical ability to access the cash to be used for settlement; and
  3. the settlement risk is insignificant.

If chosen, the policy must be applied to all payments made through the same payment system.

Example

A company instructs its bank on 31 December 2026 to pay a supplier S$50,000. The funds leave its account on 2 January 2027.

  • Default rule: both the payable and the cash remain on the 31 December 2026 balance sheet.
  • With the electronic payment election (if all three conditions are met): both the payable and the cash are removed on 31 December 2026.

Year-end cut-off for payments therefore needs careful review.

2. ESG-Linked and Other Contingent Features

Many loans now carry interest rates that change if the borrower meets sustainability (ESG) targets. The amendments clarify how to assess whether such loans pass the “solely payments of principal and interest” test, so that qualifying loans can continue to be measured at amortised cost rather than fair value. The amendments also clarify the treatment of non-recourse loans and contractually linked instruments.

3. New Disclosures

  • For equity investments designated at fair value through other comprehensive income: fair value gains or losses split between investments sold during the year and those still held.
  • For financial instruments with contingent features (such as ESG-linked terms): a description of the contingent event, the possible range of changes to cash flows, and the carrying amounts affected.

Transition

The amendments apply retrospectively, but comparative figures do not need to be restated. Any cumulative effect is adjusted against opening balances at the date of initial application.

What You Should Do Now

  • Review how payments made around the year-end are recorded, and decide whether to adopt the electronic payment election for each payment system.
  • Review the terms of any sustainability-linked or other loans with contingent interest features.
  • Update accounting policies and disclosures in your FY2026 financial statements.

How We Can Help You

We can review your payment processes and loan agreements, assess the impact of the amendments, and update your FY2026 financial statements. Contact us to arrange a discussion.

References

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FRS 119: Reduced Disclosures for Subsidiaries and Small Entities from 2027

Many Singapore companies prepare full financial statements with extensive disclosures that their readers rarely need. A new standard, FRS 119, allows eligible companies to keep full FRS accounting but provide significantly fewer disclosures, for financial years beginning on or after 1 January 2027.

Background

  • The Accounting Standards Committee (ASC) issued FRS 119 and SFRS(I) 19 Subsidiaries without Public Accountability: Disclosures in October 2024, based on IFRS 19.
  • In August 2025, the ASC amended FRS 119 to extend the same relief to small entities, renaming it Subsidiaries and Small Entities without Public Accountability: Disclosures.
  • Applying the standard is optional. Recognition, measurement and presentation still follow full FRS; only the disclosures are reduced.

Who Can Apply FRS 119?

1. Subsidiaries without public accountability whose parent (local or foreign) publishes consolidated financial statements available for public use that comply with FRS, SFRS(I) or IFRS.

2. Small entities without public accountability that report under full FRS and:

  • are not a public company under the Companies Act 1967;
  • are not a registered charity; and
  • meet at least two of these three size criteria:
    • total annual revenue of not more than S$10 million;
    • total assets of not more than S$10 million;
    • not more than 50 employees.

A company generally needs to meet the criteria for the two preceding consecutive financial years before it can apply FRS 119, so FY2025 and FY2026 figures matter for a December 2027 year-end.

What Changes in Practice

  • Shorter financial statements, with simplified disclosures on areas such as financial instruments, leases and fair value.
  • Lower preparation time and cost, and a more focused review by auditors.
  • Companies currently using the SFRS for Small Entities may consider moving to full FRS with FRS 119 disclosures, gaining full FRS accounting without the full disclosure burden.

Example: A Singapore subsidiary of an overseas group whose parent publishes IFRS consolidated accounts can drop many detailed risk and lease disclosures from its own statutory accounts, while still providing the information the parent needs for group reporting.

What You Should Do Now

  • Check whether your company qualifies, using your FY2025 and FY2026 figures.
  • Decide whether to adopt FRS 119 from 2027 (earlier application is permitted).
  • For subsidiaries, confirm what disclosures your parent still needs in the group reporting package.

How We Can Help You

We can assess your eligibility, advise on whether FRS 119 or the SFRS for Small Entities suits your company better, and prepare your financial statements under the new requirements. Contact us to arrange a discussion.

References

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SFRS for Small Entities (Third Edition): Key Changes from 2027

The Singapore Financial Reporting Standard for Small Entities (SFRS for Small Entities) is a simplified accounting framework used by many private companies. In August 2025, the Accounting Standards Committee (ASC) issued its third edition, aligned with the third edition of the international IFRS for SMEs Accounting Standard. It applies to financial years beginning on or after 1 January 2027.

Who Uses the SFRS for Small Entities?

Private companies without public accountability that meet at least two of three size criteria: total annual revenue of not more than S$10 million, total assets of not more than S$10 million, and not more than 50 employees. Many owner-managed and family companies in Singapore fall into this group.

Key Changes

  • Revenue: a revised revenue section based on a simplified version of the five-step model in FRS 115. Companies will need to identify separate performance obligations in a contract and recognise revenue when (or as) each is satisfied.
  • Fair value measurement: a new section on how to measure fair value and what to disclose, consistent with FRS 113.
  • Financial instruments: the two previous sections are combined into a single section aligned with the classification principles of FRS 109. The option to apply the older recognition and measurement rules is removed. The expected credit loss model is not introduced; instead, more disclosure on overdue receivables (an ageing analysis) is required.
  • Consolidation and business combinations: updated definition of control, in line with FRS 110, and revised requirements for business combinations and goodwill.
  • Leases: no change. Small entities continue to account for operating leases off balance sheet, unlike FRS 116.

Example: Revenue from Bundled Contracts

A company sells a machine together with 12 months of maintenance for a single price. Under the new revenue section, the price is split between the machine and the maintenance service. Revenue for the machine is recognised on delivery, while revenue for maintenance is recognised over the 12 months.

Transition

The changes generally apply retrospectively, with specific transition reliefs, including for the new revenue and fair value sections. Companies with a December year-end should start collecting comparative information for FY2026 so they are ready for FY2027.

Should You Stay on the SFRS for Small Entities?

From 2027, small companies also have a new option: apply full FRS with the reduced disclosures of FRS 119. This may suit companies that prefer full FRS accounting (for example, for leases or impairment) but want shorter disclosures. The right choice depends on your stakeholders, banking relationships and group reporting needs.

How We Can Help You

We can review your contracts and balances for the impact of the new edition, help you decide between the SFRS for Small Entities and full FRS, and prepare your financial statements. Contact us to arrange a discussion.

References

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Does Your Singapore Holding Company Need to Prepare Consolidated Accounts?

If your Singapore company sits in the middle of a corporate structure as an intermediate holding company, you’ve probably asked yourself: “Do I really need to prepare consolidated financial statements, or can I stick to single-entity accounts?”

The short answer? You might be exempt.

However, whether you qualify depends on one easily overlooked factor: which accounting framework your company uses (SFRS vs. SFRS(I)) and how your parent company prepares its accounts.

Here is what you need to know to get it right.

The Rule: Paragraph 4(a) Exemption

Under both FRS 110 and SFRS(I) 10, an intermediate holding company doesn’t need to produce consolidated accounts if it meets four straightforward conditions:

  1. Owners are on board: It’s a wholly-owned subsidiary, or its non-controlling owners have been notified and don’t object to skipping consolidated statements.

  2. Not publicly listed: Its debt or stock isn’t traded on an exchange.

  3. No public filings: It isn’t currently filing with a securities regulator to list instruments.

  4. Parent company covers it: The ultimate (or higher-tier) parent company already produces financial statements for public use that cover the group.

It’s Condition #4 where many business owners get caught out.

Where SFRS 110 vs. SFRS(I) 10 Split Apart

Depending on whether your company reports under standard Singapore FRS or SFRS(I), the rules for your parent company’s financial statements are quite different. 

1. If your company reports under SFRS(I) 10

SFRS(I) strictly follows International Financial Reporting Standards (IFRS). Because of this, the exemption rule is tight:

  • The Rule: Your parent company’s consolidated accounts must be prepared strictly under SFRS(I) or IFRS.

  • The Catch: If your parent company prepares its consolidated accounts under Singapore FRS or another local GAAP, your company cannot claim the exemption. You will have to prepare full consolidated financial statements for your Singapore entity.

2. If your company reports under FRS 110

Standard Singapore FRS gives you much more breathing room:

  • The Rule: The parent company simply needs to publish statements available for public use where subsidiaries are consolidated (or measured at fair value through profit or loss).

  • The Advantage: It doesn’t strictly matter if the parent uses FRS, SFRS(I), IFRS, or another recognized GAAP—as long as they consolidate the group in their public accounts, your Singapore intermediate company can claim the exemption.

Next Steps for Your Business

Before you finalize your year-end financial statements:

  1. Double-check your framework: Confirm whether your Singapore entity reports under standard FRS or SFRS(I).

  2. Get a copy of the parent’s accounts: Ensure your parent company’s consolidated statements are audited and publicly available.

  3. Don’t forget disclosure: If you claim the exemption, your standalone financial statements must explicitly state this, along with the name and location of the parent company publishing the consolidated accounts.

Need a hand with your financial statements?

Consolidation rules and group reporting can get messy fast. If you are unsure whether your holding company qualifies for an exemption or need help preparing your year-end financial statements, drop us a message—our accounting team is here to help!

Contact us
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Accounting for Cryptoassets

As cryptoassets become increasingly common in commercial transactions and investment portfolios, companies must understand how to account for them appropriately under Singapore Financial Reporting Standards (International) [SFRS(I)]. Unlike traditional assets, cryptoassets do not fall neatly into existing categories such as cash, cash equivalents, or financial instruments, and therefore require careful classification based on their characteristics and intended use.

Classification of Cryptoassets

Cryptoassets generally fall into four broad categories:

  • Cryptocurrencies – Digital currencies used as a medium of exchange or store of value.

  • Utility Tokens – Tokens granting access to specific services, platforms, or products.

  • Asset Tokens – Tokens representing ownership or rights to underlying physical or financial assets.

  • Security Tokens – Tokens that mirror the economic rights of traditional securities such as equity or debt.

The accounting treatment depends on which category the asset falls into.

Accounting Treatment

Cryptocurrencies

  • If held for trading, they may be classified as inventory under SFRS(I) 2.

  • Otherwise, they typically meet the definition of intangible assets under SFRS(I) 1-38.

Utility Tokens

  • Depending on the holder’s purpose, they may be accounted for as inventory, intangible assets, prepayments, or financial instruments.

Asset Tokens

  • Accounting follows the standard relevant to the underlying asset the token represents.

Security Tokens

  • When they meet the definition of a financial asset, they fall under the scope of SFRS(I) 9 Financial Instruments.

Key Considerations for Businesses

Companies must evaluate cryptoassets based on their substance and economic reality, rather than solely their legal form. This assessment determines whether the asset represents a right to goods, services, cash flows, ownership interests, or simply an intangible digital resource. Because cryptoassets do not fit into one uniform accounting model, professional judgment and consistent application of relevant standards are essential.

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IFRS 18 – Key Technical Changes to Financial Statement Presentation

The International Accounting Standards Board (IASB) has issued IFRS 18 – Presentation and Disclosure in Financial Statements, which introduces a comprehensive restructuring of the statement of profit or loss and significantly expands disclosure requirements. Singapore is expected to adopt IFRS 18 into SFRS(I) for annual periods beginning on or after 1 January 2027, with full retrospective application.

Mandatory New Presentation Structure

Standardised Profit or Loss Categories

IFRS 18 introduces three mandatory, principle-based categories into the statement of profit or loss:

  • Operating

  • Investing

  • Financing

All income and expense items must be classified within these categories based on detailed application guidance. This represents a fundamental shift from existing practice, which allows more judgement in defining intermediate performance measures. The new structure aims to enhance cross-entity comparability and reduce diversity in practice.

Prescribed Subtotals

The standard introduces consistent subtotals across entities, such as:

  • Operating profit

  • Profit before financing and income taxes

Entities may no longer present bespoke subtotals unless they qualify as a Management-Defined Performance Measure (MPM) under the new disclosure framework.

Management-Defined Performance Measures (MPMs)

IFRS 18 establishes a specific framework for Management-Defined Performance Measures, defined as subtotals of income and expenses that:

  1. Are used in public communications outside the financial statements; and

  2. Reflect management’s view of an aspect of the entity’s overall financial performance.

Examples include Adjusted EBITDA, “core profit,” or other non-IFRS performance metrics commonly used in investor reporting.

For each MPM, entities must:

  • Provide a clear definition and description

  • Present a quantitative reconciliation to the nearest IFRS-defined subtotal

  • Disclose explanations of adjustments, including their nature and rationale

  • Present comparative information consistently across periods

This introduces discipline, transparency and comparability around non-GAAP performance metrics historically communicated without standardised requirements.

Enhanced Disaggregation Requirements

IFRS 18 tightens the requirements for disaggregation of income and expenses, requiring entities to:

  • Provide more granular breakdowns where necessary for users to understand performance

  • Avoid broad, aggregated line items such as “other expenses” unless immaterial

  • Apply a consistent basis for classification across the financial statements and notes

The standard specifies factors to assess whether items require further disaggregation, including nature, function, measurement basis, and variability.

Disclosures of “Unusual” Income and Expenses

IFRS 18 introduces explicit requirements to disclose unusual income and expense items, defined as items that:

  • Are not expected to recur in the near term; and

  • Have a significant effect on financial performance.

Entities must:

  • Identify such items based on the standard’s criteria

  • Disclose the amount, nature, and reason the item is considered unusual

  • Present comparative disclosures

This enhances users’ understanding of non-recurring items affecting performance trends.

Retrospective Application and Comparative Information

The standard requires full retrospective application, including:

  • Restating all comparative periods using the new P&L structure

  • Reclassifying historical income and expense items into operating, investing, and financing categories

  • Applying MPM definitions and reconciliations consistently to prior periods

  • Providing comparative disclosure of unusual items and disaggregation detail

As a result, entities presenting FY2027 financial statements will also present restated FY2026 comparatives under the IFRS 18 framework.

Implications for Reporting, Systems and Communications

The structural changes introduced by IFRS 18 will have significant implications for:

  • Financial statement presentation and mapping

  • Internal reporting frameworks

  • KPI and performance metric definitions

  • Investor and lender communication

  • Disclosure controls and accounting policy frameworks

Given the mandatory retrospective application and shift to standardised categories and subtotals, the adoption of IFRS 18 represents one of the most material presentation changes since the adoption of IFRS itself.

If you require technical guidance on IFRS 18 interpretation, presentation impacts, or disclosure implications, our team can support you with detailed analysis and implementation expertise.

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Accounting for Cryptocurrencies

As businesses in Singapore and globally explore new frontiers in digital finance, cryptocurrencies have increasingly appeared on corporate balance sheets. From technology firms like Tesla to financial institutions like DBS Bank, cryptoassets are no longer fringe investments. This shift raises an important question: How should cryptocurrencies and other digital tokens be accounted for under Singapore Financial Reporting Standards (International) [SFRS(I)]?

Cryptocurrency ≠ Cash or Financial Asset

Although often referred to as “digital money,” cryptocurrencies like Bitcoin or Ethereum do not meet the definition of cash or cash equivalents under SFRS(I) 1-7, as they are not legal tender and lack universal acceptance. Similarly, they are not financial assets under SFRS(I) 9, as they do not give holders contractual rights to receive cash or another financial asset.

Beyond Cryptocurrency: 4 Types of Cryptoassets

Cryptocurrency is just one category in the growing universe of digital tokens. The ISCA Financial Reporting Guidance (FRG) 2, titled “Accounting for Cryptoassets from a Holder’s Perspective”, classifies cryptoassets into four types, each with different accounting treatments:

Type of CryptoassetNature and Description
CryptocurrencyUsed as a medium of exchange or store of value; does not represent ownership rights or entitlements.
Utility TokenGrants access to specific services or products on a blockchain platform.
Asset TokenRepresents ownership of a physical or financial asset (e.g., real estate, commodities).
Security TokenRepresents equity or debt interests with associated contractual rights (e.g., dividends, repayment).

Accounting Treatment by Type

Type Applicable StandardsCommon Measurement Basis
Cryptocurrency- SFRS(I) 1-38 (Intangible Assets)- At cost less impairment
- SFRS(I) 2 (Inventories) - At cost less impairment or fair value less costs to sell (For broker-trader)
Utility Token- SFRS(I) 2 (Inventories)- At cost less impairment or fair value less costs to sell (For broker-trader)
- SFRS(I) 9 (Financial Instruments) - Fair value or amortised cost based on classification
- SFRS(I) 1-16 (Leases)- At cost less impairment
- SFRS(I) 1-38 (Intangible Assets)- At cost less impairment
- Prepayment- At amortised cost
Asset Token- Based on underlying assets
Security Token- SFRS(I) 9 (Financial Instruments) - Fair value or amortised cost based on classification

Conclusion

While cryptocurrencies are leading the headlines, companies should be aware that there are multiple types of cryptoassets, each with distinct accounting implications. The ISCA’s FRG 2 provides a structured framework to ensure that cryptoasset holdings are properly classified and presented under SFRS(I).

If your company holds or plans to invest in cryptoassets, it’s crucial to assess their nature and ensure compliance with the appropriate accounting standard. Our advisory team can help navigate this evolving space with clarity and accuracy.

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FRS 115 – Specific Area: Franchise

Under a franchise, an entity promises to grant a license to use its intellectual property to a customer.

In addition to a promise to grant a licence to a customer, an entity may also promise to transfer other goods or services to the customer

If the promise to grant a licence is not distinct from other promised goods or services in the contract in accordance, an entity shall account for the promise to grant a licence and those other promised goods or services together as a single performance obligation.

If the promise to grant the licence is distinct from the other promised goods or services in the contract and, therefore, the promise to grant the licence is a separate performance obligation, an entity shall determine whether the licence transfers to a customer either at a point in time or over time. Continue reading “FRS 115 – Specific Area: Franchise”

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FRS 115 – Specific area: Consignment Arrangements

Previously under FRS 18 illustrative example, when the buyer is acting, in substance, as an agent, the sale is treated as a consignment sale.

Under FRS 115, this determination is based on whether control of the inventory has passed to the consignee upon delivery.

Indicators that an arrangement is a consignment arrangement include, but are not limited to, the following:

(a) the product is controlled by the entity until a specified event occurs, such as the sale of the product to a customer of the dealer or until a specified period expires;

(b) the entity is able to require the return of the product or transfer the product to a third party (such as another dealer); and

(c) the dealer does not have an unconditional obligation to pay for the product (although it might be required to pay a deposit). Continue reading “FRS 115 – Specific area: Consignment Arrangements”