Wiley IFRS: Practical Implementation Guide and Workbook, 3rd Edition

Chapter 23

FINANCIAL INSTRUMENTS: PRESENTATION (IAS 32)

INTRODUCTION

IAS 32, Financial Instruments: Presentation, addresses the presentation of financial instruments as financial liabilities or equity. IAS 32 includes requirements for

• The presentation of financial instruments as either financial liabilities or equity, including:

• When a financial instrument should be presented as a financial liability or equity instrument by the issuing entity

• How to separate and present the components of a compound financial instrument that contains both liability and equity elements

• The accounting treatment of reacquired equity instruments of the entity (“treasury shares”)

• The presentation of interest, dividends, losses, and gains related to financial instruments

• The circumstances in which financial assets and financial liabilities should be offset

IAS 32 complements the requirements for recognizing and measuring financial assets and financial liabilities in IFRS 9, Financial Instruments, and IAS 39, Financial Instruments: Recognition and Measurement, and the disclosure requirements for financial instruments in IFRS 7, Financial Instruments: Disclosures.

Prior to the issuance of IFRS 7, IAS 32 contained both presentation and disclosure requirements and was entitled Financial Instruments: Disclosure and Presentation. IFRS 7, which became effective for annual periods beginning on or after January 1, 2007, relocates the disclosure requirements in IAS 30 and IAS 32 to IFRS 7. Therefore, ...