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Please provide summary on Ind AS 109 - Financial Instruments

Avatar 37a3bd7bc7328f0ead2c0f6f635dddf60615e676e6b4ddf964144012e529de45 Prity asked almost 3 years ago

Please provide summary on Ind AS 109 - Financial Instruments

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3 Answers
Avatar 37a3bd7bc7328f0ead2c0f6f635dddf60615e676e6b4ddf964144012e529de45 Anil Dhawan answered over 2 years ago

AS 109 ------ The objective of this Standard is to establish principles for the financial reporting of financial assets and financial liabilities that will present relevant and useful information to users of financial statements for their assessment of the amounts, timing and uncertainty. This Standard shall be applied to those contracts to buy or sell a non-financial item that can be settled net in cash or another financial instrument, or by exchanging financial instruments, as if the contracts were financial instruments, with the exception of contracts that were entered into and continue to be held for the purpose of the receipt or delivery of a non-financial item in accordance with the entity’s expected purchase, sale or usage requirements. However, this Standard shall be applied to those contracts that an entity designates as measured at fair value through profit or loss in accordance with paragraph 2.5. A contract to buy or sell a non-financial item that can be settled net in cash or another financial instrument, or by exchanging financial instruments, as if the contract was a financial instrument, may be irrevocably designated as measured at fair value through profit or loss even if it was entered into for the purpose of the receipt or delivery of a non-financial item in accordance with the entity’s expected purchase, sale or usage requirements.

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Open uri20170510 32134 1ue0f38?1494421710 rohit agarwal answered over 2 years ago

Please provide summary on Ind AS 109 - Financial Instruments The objective of this Standard is to establish principles for the financial reporting of financial assets and financial liabilities that will present relevant and useful information to users of financial statements for their assessment of the amounts, timing and uncertainty. This Standard shall be applied to those contracts to buy or sell a non-financial item that can be settled net in cash or another financial instrument, or by exchanging financial instruments, as if the contracts were financial instruments, with the exception of contracts that were entered into and continue to be held for the purpose of the receipt or delivery of a non-financial item in accordance with the entity’s expected purchase, sale or usage requirements. However, this Standard shall be applied to those contracts that an entity designates as measured at fair value through profit or loss in accordance with paragraph 2.5. A contract to buy or sell a non-financial item that can be settled net in cash or another financial instrument, or by exchanging financial instruments, as if the contract was a financial instrument, may be irrevocably designated as measured at fair value through profit or loss even if it was entered into for the purpose of the receipt or delivery of a non-financial item in accordance with the entity’s expected purchase, sale or usage requirements. This designation is available only at inception of the contract and only if it eliminates or significantly reduces a recognition inconsistency (sometimes referred to as an ‘accounting mismatch’) that would otherwise arise from not recognising that contract because it is excluded from the scope of this Standard.

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Data?1494421730 rohit awasthi answered almost 3 years ago

Dear Friend > Ind AS 109 - Financial Instruments This Ind AS contains requirements for recognition and measurement. The standards cover all types of financial instruments, including receivables, payables, investments in bonds and shares, borrowings and derivatives. They also apply to certain contracts to buy or sell non-financial assets (such as commodities) that can be net-settled in cash or another financial instrument. The key concepts of classification, measurement and recognition for financial instruments are discussed in this section. Nature and characteristics of financial instruments - Financial instruments include a wide range of assets and liabilities, such as trade debtors, trade creditors, loans, finance lease receivables and derivatives. Embedded derivatives in host contracts - Ind AS 109 specifically prohibits bifurcation of embedded derivatives for financial assets. Embedded derivatives in relation to financial liabilities, that are not ‘closely related’ to the rest of the contract, are separated and accounted for as stand-alone derivatives. Analysing contracts for potential embedded derivatives is one of the more challenging aspects of Ind AS 109. Classification and measurement of financial instruments - All financial assets and liabilities are measured initially at fair value under Ind AS 109. The fair value of a financial instrument is normally the transaction price, that is, the fair value of the consideration given or received. The way financial instruments are classified under Ind AS 109 drives how they are subsequently measured and where measurement changes are accounted for. Impairment - Ind AS 109 outlines a three-stage model (general model) for impairment based on changes in credit quality since initial recognition. Stage 1 includes financial instruments that have not had a significant increase in credit risk since the initial recognition or have low credit risk at the reporting date. Stage 2 includes financial instruments that have had a significant increase in credit risk since the initial recognition but that do not have objective evidence of impairment. Stage 3 includes financial assets that have objective evidence of impairment at the reporting date. Thanks

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