Wiley International Trends in Financial Reporting under IFRS: Including Comparisons with US GAAP, Chinese GAAP, and Indian GAAP

CHAPTER 24

FINANCIAL INSTRUMENTS: DISCLOSURES (IFRS 7)

1. OBJECTIVE

1.1 This Standard deals with disclosures for financial instruments and their related risks.

1.2 It applies to all entities and for all risks arising from financial instruments excluding interest in subsidiaries, joint ventures, associates, employee benefit plans, share-based payments, insurance contracts, and contracts for contingent consideration in a business combination.

2. SYNOPSIS OF THE STANDARD

2.1 This Standard mandates disclosures relating to financial instruments and their impact on the statement of financial position, statement of comprehensive income, equity, accounting policies, hedge accounting, and fair values of financial instruments, which are outlined in detail in this chapter. These disclosures enable users to evaluate significance of financial instruments for an entity’s financial position and performance.

2.2 This Standard also requires qualitative and quantitative disclosures with respect to the nature and extent of the risk exposures arising from financial instruments, and management’s objectives, policies, and processes for managing those risks.

3. DISCLOSURE REQUIREMENTS

The disclosures required to be made under this Standard are discussed next.

3.1 Statement of Financial Position

3.1.1 The carrying value of financial assets and liabilities, credit risk and related collateral issues, liabilities with embedded options, loans payable, and derecognition and reclassification issues should be ...