Indian Accounting Standard (Ind AS) 107 : Financial Instruments: Disclosures
Objective
1. The objective of this Indian Accounting Standard is to require entities to provide disclosures in their financial statements that enable users to evaluate:
(a) the significance of financial instruments for the entitys financial position and performance; and
(b) the nature and extent of risks arising from financial instruments to which the entity is exposed during the period and at the end of the reporting period, and how the entity manages those risks.
2. The principles in this Indian Accounting Standard complement the principles for recognising, measuring and presenting financial assets and financial liabilities in Ind AS 39 Financial Instruments: Recognition and Measurement and Ind AS 32 Financial Instruments: Presentation.
Scope
3. This Indian Accounting Standard shall be applied by all entities to all types of financial instruments, except:
(a) those interests in subsidiaries, associates or joint ventures that are accounted for in accordance with Ind AS 27 Consolidated and Separate Financial Statements, Ind AS 28 Investments in Associates or Ind AS 31 Interests in Joint Ventures. However, in some cases, Ind AS 27, Ind AS 28, and Ind AS 31 permits an entity to account for an interest in a subsidiary, associate or joint venture using Ind AS 39; in those cases, entities shall apply the requirements of this Indian Accounting Standard. Entities shall also apply this Indian Accounting Standard to all derivatives linked to interests in subsidiaries, associates or joint ventures unless the derivative meets the definition of an equity instrument in Ind AS 32.
(b) employers rights and obligations arising from employee benefit plans, to which Ind AS 19 Employee Benefits applies.
(c) [Refer to Appendix 1]
(d) insurance contracts as defined in Ind AS 104 Insurance Contracts. However, this Indian Accounting Standard applies to derivatives that are embedded in insurance contracts if Ind AS 39 requires the entity to account for them separately. Moreover, an issuer shall apply this Indian Accounting Standard to financial guarantee contracts if the issuer applies Ind AS 39 in recognising and measuring the contracts, but shall apply Ind AS 104 if the issuer elects, in accordance with paragraph 4(d) of Ind AS 104, to apply Ind AS 104 in recognising and measuring them.
(e) financial instruments, contracts and obligations under share-based payment transactions to which Ind AS 102 Share-based Payment applies, except that this Indian Accounting Standard applies to contracts within the scope of paragraphs 57 of Ind AS 39.
(f) instruments that are required to be classified as equity instruments in accordance with paragraphs 16A and 16B or paragraphs 16C and 16D of Ind AS 32.
4. This Indian Accounting Standard applies to recognised and unrecognised financial instruments. Recognised financial instruments include financial assets and financial liabilities that are within the scope of Ind AS 39. Unrecognised financial instruments include some financial instruments that, although outside the scope of Ind AS 39, are within the scope of this Indian Accounting Standard (such as some loan commitments).
5. This Indian Accounting Standard applies to contracts to buy or sell a non-financial item that are within the scope of Ind AS 39 (see paragraphs 57 of Ind AS 39).
Classes of financial instruments and level of disclosure
6. When this Indian Accounting Standard 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.
Significance of financial instruments for financial position and performance
7. An entity shall disclose information that enables users of its financial statements to evaluate the significance of financial instruments for its financial position and performance.
Balance sheet
Categories of financial assets and financial liabilities
8. The carrying amounts of each of the following categories, as defined in Ind AS 39, shall be disclosed either in the balance sheet or in the notes:
(a) financial assets at fair value through profit or loss, showing separately (i) those designated as such upon initial recognition and (ii) those classified as held for trading in accordance with Ind AS 39;
(b) held-to-maturity investments;
(c) loans and receivables;
(d) available-for-sale financial assets;
(e) financial liabilities at fair value through profit or loss, showing separately (i) those designated as such upon initial recognition and (ii) those classified as held for trading in accordance with Ind AS 39; and
(f) financial liabilities measured at amortised cost.
Financial assets or financial liabilities at fair value through profit or loss
9. If the entity has designated a loan or receivable (or group of loans or receivables) as at fair value through profit or loss, it shall disclose:
(a) the maximum exposure to credit risk (see paragraph 36(a)) of the loan or receivable (or group of loans or receivables) at the end of the reporting period.
(b) the amount by which any related credit derivatives or similar instruments mitigate that maximum exposure to credit risk.
(c) the amount of change, during the period and cumulatively, in the fair value of the loan or receivable (or group of loans or receivables) that is attributable to changes in the credit risk of the financial asset determined either:
(i) as the amount of change in its fair value that is not attributable to changes in market conditions that give rise to market risk; or
(ii) using an alternative method the entity believes more faithfully represents the amount of change in its fair value that is attributable to changes in the credit risk of the asset.
Changes in market conditions that give rise to market risk include changes in an observed (benchmark) interest rate, commodity price, foreign exchange rate or index of prices or rates.
(d) the amount of the change in the fair value of any related credit derivatives or similar instruments that has occurred during the period and cumulatively since the loan or receivable was designated.
10. If the entity has designated a financial liability as at fair value through profit or loss in accordance with paragraph 9 of Ind AS 39, it shall disclose:
(a) the amount of change, during the period and cumulatively, in the fair value of the financial liability that is attributable to changes in the credit risk of that liability determined either:
(i) as the amount of change in its fair value that is not attributable to changes in market conditions that give rise to market risk (see Appendix B, paragraph B4); or
(ii) using an alternative method the entity believes more faithfully represents the amount of change in its fair value that is attributable to changes in the credit risk of the liability.
Changes in market conditions that give rise to market risk include changes in a benchmark interest rate, the price of another entitys financial instrument, a 5
commodity price, a foreign exchange rate or an index of prices or rates. For contracts that include a unit-linking feature, changes in market conditions include changes in the performance of the related internal or external investment fund.
(b) the difference between the financial liabilitys carrying amount and the amount the entity would be contractually required to pay at maturity to the holder of the obligation.
11. The entity shall disclose:
(a) the methods used to comply with the requirements in paragraphs 9(c) and 10(a).
(b) if the entity believes that the disclosure it has given to comply with the requirements in paragraph 9(c) or 10(a) does not faithfully represent the change in the fair value of the financial asset or financial liability attributable to changes in its credit risk, the reasons for reaching this conclusion and the factors it believes are relevant.
Reclassification
12. If the entity has reclassified a financial asset (in accordance with paragraphs 5154 of Ind AS 39) as one measured:
(a) at cost or amortised cost, rather than at fair value; or
(b) at fair value, rather than at cost or amortised cost,
it shall disclose the amount reclassified into and out of each category and the reason for that reclassification.
12A. If the entity has reclassified a financial asset out of the fair value through profit or loss category in accordance with paragraph 50B or 50D of Ind AS 39 or out of the available-for-sale category in accordance with paragraph 50E of Ind AS 39, it shall disclose:
(a) the amount reclassified into and out of each category;
(b) for each reporting period until derecognition, the carrying amounts and fair values of all financial assets that have been reclassified in the current and previous reporting periods;
(c) if a financial asset was reclassified in accordance with paragraph 50B, the rare situation, and the facts and circumstances indicating that the situation was rare;
(d) for the reporting period when the financial asset was reclassified, the fair value gain or loss on the financial asset recognised in profit or loss or other comprehensive income in that reporting period and in the previous reporting period;
(e) for each reporting period following the reclassification (including the reporting period in which the financial asset was reclassified) until derecognition of the financial asset, the fair value gain or loss that would have been recognised in 6
profit or loss or other comprehensive income if the financial asset had not been reclassified, and the gain, loss, income and expense recognised in profit or loss; and
(f) the effective interest rate and estimated amounts of cash flows the entity expects to recover, as at the date of reclassification of the financial asset.
Derecognition
13. An entity may have...
To continue reading
Request your trial