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BASIS FOR CONCLUSIONS ON IFRS 7 DISCLOSURES

BASIS FOR CONCLUSIONS ON IFRS 7 DISCLOSURES

BASIS FOR CONCLUSIONS ON IFRS 7 DISCLOSURES: When this IFRS requires disclosures by class of financial instrument, an entity shall group financial instruments into classes that are appropriate to the nature of the information disclosed and that take into account the characteristics of those financial instruments. An entity shall provide sufficient information to permit reconciliation to the line items presented in the balance sheet.

In accordance with AS 1 Presentation of Financial Statements, an entity discloses, in the summary of significant accounting policies, the measurement basis (or bases) used in preparing the financial statements and the other accounting policies used that are relevant to an understanding of the financial statements.

For each type of risk arising from financial instruments, an entity shall disclose:

  1. the exposures to risk and how they arise;
  2. its objectives, policies and processes for managing the risk and the methods used to measure the risk; and
  3. any changes in (a) or (b) from the previous period.

Quantitative disclosures

For each type of risk arising from financial instruments, an entity shall disclose:

  1. summary quantitative data about its exposure to that risk at the reporting date. This disclosure shall be based on the information provided internally to key management personnel of the entity , for example the entity’s board of directors or chief executive officer.
  2. the disclosures required, to the extent not provided in
  3. unless the risk is not material
  4. concentrations of risk if not apparent from (a) and (b).

BASIS FOR CONCLUSIONS ON IFRS 7 DISCLOSURES

The objective of this IFRS is to require entities to provide disclosures in their financial statements that enable users to evaluate:

  1. The significance of financial instruments for the entity’s financial position and performance; and
  2. The nature and extent of risks arising from financial instruments to which the entity is exposed during the period and at the reporting date, and how the entity manages those risks. 

The principles in this IFRS complement the principles for recognising, measuring and presenting financial assets and financial liabilities in IAS 32 Financial Instruments.

BASIS FOR CONCLUSIONS ON IFRS 7 DISCLOSURES

IFRS shall be applied by all entities to all types of financial instruments, except:

  1. those interests in subsidiaries, associates or joint ventures that are accounted for in accordance with IFRS 10 Consolidated Financial Statements, IAS 27 Separate Financial Statements or IAS 28 Investments in Associates and Joint Ventures. However, in some cases, IAS 27 or IAS 28 permits an entity to account for an interest in a subsidiary, associate or joint venture using IFRS 9; in those cases, entities shall apply the requirements of this IFRS and, for those measured at fair value, the requirements of IFRS 13 Fair Value Measurement. Entities shall also apply this IFRS to all derivatives linked to interests in subsidiaries, associates or joint ventures unless the derivative meets the definition of an equity instrument in IAS 32.
  2. employers’ rights and obligations arising from employee benefit plans, to which IAS 19 Employee Benefits applies.
  3. insurance contracts as defined in IFRS 4 Insurance Contracts. However, this IFRS applies to derivatives that are embedded in insurance contracts if IFRS 9 requires the entity to account for them separately. Moreover, an issuer shall apply this IFRS to financial guarantee contracts if the issuer applies IFRS 9 in recognising and measuring the contracts, but shall apply IFRS 4 if the issuer elects, in accordance with of IFRS 4, to apply IFRS 4 in recognising and measuring them.
  4. financial instruments, contracts and obligations under share-based payment transactions to which IFRS 2 Share-based Payment applies, except that this IFRS applies to contracts within the scope of IFRS 9.
  5. Instruments that are required to be classified as equity instruments.

This IFRS applies to recognised and unrecognised financial instruments. Recognised financial instruments include financial assets and financial liabilities that are within the scope of IFRS 9. Unrecognised financial instruments include some financial instruments that, although outside the scope of IFRS 9, are within the scope of this IFRS (such as some loan commitments).

This IFRS applies to contracts to buy or sell a non-financial item that are within the scope of IFRS 9.

BASIS FOR CONCLUSIONS ON IFRS 7 DISCLOSURES Dates:

  • An entity shall apply this IFRS for annual periods beginning on or after 1 January 2007. Earlier application is encouraged. If an entity applies this IFRS for an earlier period, it shall disclose that fact.
  •  If an entity applies this IFRS for annual periods beginning before 1 January 2006, it need not present comparative information for the disclosures required about the nature and extent of risks arising from financial instruments.
  • IAS 1 (as revised in 2007) amended the terminology used throughout IFRSs. In addition it amended . An entity shall apply those amendments for annual periods beginning on or after 1 January 2009. If an entity applies IAS 1 (revised 2007) for an earlier period, the amendments shall be applied for that earlier period.
  • An entity shall apply that amendment for annual periods beginning on or after 1 July 2009. If an entity applies IFRS 3 (revised 2008) for an earlier period, the amendment shall also be applied for that earlier period. However, the amendment does not apply to contingent consideration that arose from a business combination for which the acquisition date preceded the application of IFRS 3 (revised 2008). Instead, an entity shall account for such consideration in accordance with .
  • An entity shall apply the amendment for annual periods beginning on or after 1 January 2009. If an entity applies Puttable Financial Instruments and Obligations Arising on Liquidation (Amendments to IAS 32 and IAS 1), issued in February 2008, for an earlier period, the amendment shall be applied for that earlier period.
  • was amended by Improvements to IFRSs issued in May 2008. An entity shall apply that amendment for annual periods beginning on or after 1 January 2009. Earlier application is permitted. If an entity applies the amendment for an earlier period it shall disclose that fact and apply for that earlier period the amendments to. An entity is permitted to apply the amendment prospectively.
  • Improving Disclosures about Financial Instruments (Amendments to IFRS 7), issued in March 2009, amended. An entity shall apply those amendments for annual periods beginning on or after 1 January 2009. An entity need not provide the disclosures required by the amendments for:
    • (a) any annual or interim period, including any statement of financial position, presented within an annual comparative period ending before 31 December 2009.
    • (b) any statement of financial position as at the beginning of the earliest comparative period as at a date before 31 December 2009. Earlier application is permitted. If an entity applies the amendments for an earlier period, it shall disclose that fact.
  • I When an entity first applies IFRS 9, it shall disclose for each class of financial assets and financial liabilities at the date of initial application:
    • (a) the original measurement category and carrying amount determined in accordance with IAS 39.
    • (b) the new measurement category and carrying amount determined in accordance with IFRS 9.
    • (c) the amount of any financial assets and financial liabilities in the statement of financial position that were previously designated as measured at fair value through profit or loss but are no longer so designated, distinguishing between those that IFRS 9 requires an entity to reclassify and those that an entity elects to reclassify. An entity shall present these quantitative disclosures in tabular format unless another format is more appropriate.

BASIS FOR CONCLUSIONS ON IFRS 7 DISCLOSURES

When an entity first applies IFRS 9, it shall disclose qualitative information to enable users to understand:

  1. how it applied the classification requirements in IFRS 9 to those financial assets whose classification has changed as a result of applying IFRS 9.
  2. the reasons for any designation or de-designation of financial assets or financial liabilities as measured at fair value through profit or loss.

Improvements to IFRSs issued in May 2010. An entity shall apply that amendment for annual periods beginning on or after 1 July 2010. Earlier application is permitted.

Improvements to IFRSs issued in May 2010 added and amended. An entity shall apply those amendments for annual periods beginning on or after 1 January 2011. Earlier application is permitted. If an entity applies the amendments for an earlier period it shall disclose that fact.

BASIS FOR CONCLUSIONS ON IFRS 7 DISCLOSURES

 Disclosures—Transfers of Financial Assets (Amendments to IFRS 7), issued in October 2010. An entity shall apply those amendments for annual periods beginning on or after 1 July 2011. Earlier application is permitted. If an entity applies the amendments from an earlier date, it shall disclose that fact. An entity need not provide the disclosures required by those amendments for any period presented that begins before the date of initial application of the amendments.

  • An entity shall apply those amendments when it applies IFRS 13.
  • Presentation of Items of Other Comprehensive Income (Amendments to IAS 1), issued in June 2011, amended. An entity shall apply that amendment when it applies IAS 1 as amended in June 2011.
  • Disclosures—Offsetting Financial Assets and Financial Liabilities (Amendments to IFRS 7), issued in December 2011, added . An entity shall apply those amendments for annual periods beginning on or after 1 January 2013 and interim periods within those annual periods. An entity shall provide the disclosures required by those amendments retrospectively.

BASIS FOR CONCLUSIONS ON IFRS 7 DISCLOSURES

When an entity first applies the classification and measurement requirements of IFRS 9, it shall present the disclosures IFRS if it elects to, or is required to, provide these disclosures in accordance with IFRS 9.

At the date of initial application of IFRS 9 an entity shall disclose the changes in the classifications of financial assets and financial liabilities, showing separately:

  1. the changes in the carrying amounts on the basis of their measurement categories in accordance with IAS 39 (ie not resulting from a change in measurement attribute on transition to IFRS 9); and
  2. the changes in the carrying amounts arising from a change in measurement attribute on transition to IFRS 9.

The disclosures in this need not be made after the annual period in which IFRS 9 is initially applied. In the reporting period in which IFRS 9 is initially applied, an entity shall disclose the following for financial assets and financial liabilities that have been reclassified so that they are measured at amortised cost as a result of the transition to IFRS 9:

  1.  The fair value of the financial assets or financial liabilities at the end of the reporting period.
  2. the fair value gain or loss that would have been recognised in profit or loss or other comprehensive income during the reporting period if the financial assets or financial liabilities had not been reclassified.
  3. The effective interest rate determined on the date of reclassification.
  4. the interest income or expense recognised.

BASIS FOR CONCLUSIONS ON IFRS 7 DISCLOSURES

If an entity treats the fair value of a financial asset or a financial liability as its amortised cost at the date of initial application and  of IFRS 9 (2010)), the IFRS 7 14 IFRS Foundation disclosures in (c) and (d) ,  shall be made for each reporting period following reclassification until derecognition. Otherwise, the disclosures is need not be made after the reporting period containing the date of initial application. If an entity presents the disclosures set out at the date of initial application of IFRS 9, those disclosures, and the disclosures of IAS 8 during the reporting period containing the date of initial application, must permit reconciliation between:

  1. The measurement categories in accordance with IAS 39 and IFRS 9.
  2. The line items presented in the statements of financial position.

If an entity presents the disclosures set out at the date of initial application of IFRS 9, those disclosures, and the disclosures of this IFRS at the date of initial application, must permit reconciliation between:

  1. the measurement categories presented in accordance with IAS 39 and IFRS 9.
  2. the class of financial instrument at the date of initial application.

BASIS FOR CONCLUSIONS ON IFRS 7 DISCLOSURES

Investment Entities (Amendments to IFRS 10, IFRS 12 and IAS 27), issued in October 2012, amended . An entity shall apply that amendment for annual periods beginning on or after 1 January 2014. Earlier application of Investment Entities is permitted. If an entity applies that amendment earlier it shall also apply all amendments included in Investment Entities at the same time.

BASIS FOR CONCLUSIONS ON IFRS 7 DISCLOSURES

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