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Ind AS 107, Financial Instruments Disclosures, Summary

Indian Accounting Standard (Ind AS) 107 Summary

Indian Accounting Standard (Ind AS) 107, Financial Instruments: Disclosures, specifies comprehensive disclosure requirements for financial instruments in the financial statements.

The entity shall provide disclosures in the financial statements that enable users to evaluate:

  • The significance of financial instruments for the entity’s financial position and performance, and
  • 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 manage those risks.

The principles in this standard complement the principles for recognising, measuring and presenting financial assets and financial liabilities in Ind AS 32, Financial Instruments: Presentation, and Ind AS 109, Financial Instruments.

A financial asset and a financial liability are offset only when the entity:

  • Currently has a legally enforceable right to offset, and
  • Has an intention to settle net or to settle both amounts simultaneously.

Specific disclosure requirements include information on the following:

  • Carrying amounts,
  • Fair values,
  • Items designated at Fair Value Through Profit or Loss (FVTPL),
  • Investments in equity instruments designated at Fair Value Through Other Comprehensive Income (FVOCI),
  • Reclassification of financial assets between categories,
  • Offsetting of financial assets and financial liabilities and the effect of potential netting arrangements;
  • Collateral,
  • Loss allowance for expected credit losses, and
  • Hedge accounting.

Disclosures of both quantitative and qualitative information is required.

Qualitative disclosures describe management’s objectives, policies and processes for managing risks arising from financial instruments.

Quantitative data about the exposure of risks arising from financial instruments should be based on information provided internally to key management. However, certain disclosures about the entity’s exposures to credit risk, liquidity risk and market risk arising from financial instruments are required, irrespective of whether this information is provided to management.

Information is provided about financial assets that are not derecognised in their entirety.

Information is provided about financial assets that are derecognised in their entirety but in which the entity has a continuing involvement.

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