TMI BlogFinancial Instruments: DisclosuresX X X X Extracts X X X X X X X X Extracts X X X X ..... e 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 110, Consolidated Financial Statements, Ind AS 27, Separate Financial Statements or Ind AS 28, Investments in Associates and Joint Ventures. However, in some cases, Ind AS 110, Ind AS 27 or Ind AS 28 require or permit an entity to account for an interest in a subsidiary, associate or joint venture using Ind AS 109; in those cases, entities shall apply the requirements of this Ind AS and, for those measured at fair value, the requirements of Ind AS 113 Fair Value Measurement. Entities shall also apply this Ind AS 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 Appendix 1] (d) insurance contracts as defined in Ind AS 104, Insurance Contracts. However, this Ind AS applies to derivatives that are embedded in insurance contracts if Ind AS 109 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... al assets and financial liabilities 8 The carrying amounts of each of the following categories, as specified in Ind AS 109, shall be disclosed either in the balance sheet or in the notes: (a) financial assets measured at fair value through profit or loss, showing separately (i) those designated as such upon initial recognition or subsequently in accordance with paragraph 6.7.1 of Ind AS 109 and (ii) those mandatorily measured at fair value through profit or loss in accordance with Ind AS 109. (b)-(d) [Refer Appendix 1] (e) financial liabilities at fair value through profit or loss, showing separately (i) those designated as such upon initial recognition or subsequently in accordance with paragraph 6.7.1 of Ind AS 109 and (ii) those that meet the definition of held for trading in Ind AS 109 . (f) financial assets measured at amortised cost. (g) financial liabilities measured at amortised cost. (h) financial assets measured at fair value through other comprehensive income, showing separately (i) financial assets that are measured at fair value through other comprehensive income in accordance with paragraph 4.1.2A of Ind AS 109; and (ii) investments in equity ins ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ontractually required to pay at maturity to the holder of the obligation. (c) any transfers of the cumulative gain or loss within equity during the period including the reason for such transfers. (d) if a liability is derecognised during the period, the amount (if any) presented in other comprehensive income that was realised at derecognition. 10A If an entity has designated a financial liability as at fair value through profit or loss in accordance with paragraph 4.2.2 of Ind AS 109 and is required to present all changes in the fair value of that liability (including the effects of changes in the credit risk of the liability) in profit or loss (see paragraphs 5.7.7 and 5.7.8 of Ind AS 109), 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 (see paragraphs B5.7.13 B5.7.20 of Ind AS 109 for guidance on determining the effects of changes in a liability s credit risk); and (b) the difference between the financial liability s carrying amount and the amount the entity would be contractually required to pay at maturity to the hold ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the investments. (b) the fair value of the investments at the date of derecognition. (c) the cumulative gain or loss on disposal. Reclassification 12-12A [Refer Appendix 1] 12B An entity shall disclose if, in the current or previous reporting periods, it has reclassified any financial assets in accordance with paragraph 4.4.1 of Ind AS 109. For each such event, an entity shall disclose: (a) the date of reclassification. (b) a detailed explanation of the change in business model and a qualitative description of its effect on the entity s financial statements. (c) the amount reclassified into and out of each category. 12C For each reporting period following reclassification until derecognition, an entity shall disclose for assets reclassified out of the fair value through profit or loss category so that they are measured at amortised cost or fair value through other comprehensive income in accordance with paragraph 4.4.1 of Ind AS 109: (a) the effective interest rate determined on the date of reclassification; and (b) the interest revenue recognised. 12D If, since its last annual reporting date, an entity has reclassified financial assets out ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... S 32; and (ii) amounts related to financial collateral (including cash collateral); and (e) the net amount after deducting the amounts in (d) from the amounts in (c) above. The information required by this paragraph shall be presented in a tabular format, separately for financial assets and financial liabilities, unless another format is more appropriate. 13D The total amount disclosed in accordance with paragraph 13C(d) for an instrument shall be limited to the amount in paragraph 13C(c) for that instrument. 13E An entity shall include a description in the disclosures of the rights of set-off associated with the entity s recognised financial assets and recognised financial liabilities subject to enforceable master netting arrangements and similar agreements that are disclosed in accordance with paragraph 13C(d), including the nature of those rights. 13F If the information required by paragraphs 13B 13E is disclosed in more than one note to the financial statements, an entity shall cross-refer between those notes. Collateral 14 An entity shall disclose: (a) the carrying amount of financial assets it has pledged as collateral for liabilities or contingen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ). Statement of profit and loss Items of income, expense, gains or losses 20 An entity shall disclose the following items of income, expense, gains or losses either in the statement of profit and loss or in the notes: (a) net gains or net losses on: (i) financial assets or financial liabilities measured at fair value through profit or loss, showing separately those on financial assets or financial liabilities designated as such upon initial recognition or subsequently in accordance with paragraph 6.7.1 of Ind AS 109, and those on financial assets or financial liabilities that are mandatorily measured at fair value through profit or loss in accordance with Ind AS 109 (eg financial liabilities that meet the definition of held for trading in Ind AS 109). For financial liabilities designated as at fair value through profit or loss, an entity shall show separately the amount of gain or loss recognised in other comprehensive income and the amount recognised in profit or loss. (ii)- (iv) [Refer Appendix 1] (v) financial liabilities measured at amortised cost. (vi) financial assets measured at amortised cost. (vii) investments in equity instruments designated ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (b) how the entity s hedging activities may affect the amount, timing and uncertainty of its future cash flows; and (c) the effect that hedge accounting has had on the entity s balance sheet, statement of profit and loss and statement of changes in equity. 21B An entity shall present the required disclosures in a single note or separate section in its financial statements. However, an entity need not duplicate information that is already presented elsewhere, provided that the information is incorporated by cross-reference from the financial statements to some other statement, such as a management commentary or risk report, that is available to users of the financial statements on the same terms as the financial statements and at the same time. Without the information incorporated by cross-reference, the financial statements are incomplete. 21C When paragraphs 22A 24F require the entity to separate by risk category the information disclosed, the entity shall determine each risk category on the basis of the risk exposures an entity decides to hedge and for which hedge accounting is applied. An entity shall determine risk categories consistently for all hedge accounting discl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... endix 1] 23A Unless exempted by paragraph 23C, an entity shall disclose by risk category quantitative information to allow users of its financial statements to evaluate the terms and conditions of hedging instruments and how they affect the amount, timing and uncertainty of future cash flows of the entity. 23B To meet the requirement in paragraph 23A, an entity shall provide a breakdown that discloses: (a) a profile of the timing of the nominal amount of the hedging instrument; and (b) if applicable, the average price or rate (for example strike or forward prices etc) of the hedging instrument. 23C In situations in which an entity frequently resets (ie discontinues and restarts) hedging relationships because both the hedging instrument and the hedged item frequently change (ie the entity uses a dynamic process in which both the exposure and the hedging instruments used to manage that exposure do not remain the same for long-such as in the example in paragraph B6.5.24(b) of Ind AS 109) the entity: (a) is exempt from providing the disclosures required by paragraphs 23A and 23B. (b) shall disclose: (i) information about what the ultimate risk management strateg ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... used as the basis for recognising hedge ineffectiveness for the period; and (v) the accumulated amount of fair value hedge adjustments remaining in the balance sheet for any hedged items that have ceased to be adjusted for hedging gains and losses in accordance with paragraph 6.5.10 of Ind AS 109. (b) for cash flow hedges and hedges of a net investment in a foreign operation: (i) the change in value of the hedged item used as the basis for recognising hedge ineffectiveness for the period (ie for cash flow hedges the change in value used to determine the recognised hedge ineffectiveness in accordance with paragraph 6.5.11(c) of Ind AS 109); (ii) the balances in the cash flow hedge reserve and the foreign currency translation reserve for continuing hedges that are accounted for in accordance with paragraphs 6.5.11 and 6.5.13(a) of Ind AS 109; and (iii) the balances remaining in the cash flow hedge reserve and the foreign currency translation reserve from any hedging relationships for which hedge accounting is no longer applied. 24C An entity shall disclose, in a tabular format, the following amounts separately by risk category for the types of hedges as follows: ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e value of options that hedge transaction related hedged items and the amounts associated with the time value of options that hedge time-period related hedged items when an entity accounts for the time value of an option in accordance with paragraph 6.5.15 of Ind AS 109; and (c) differentiates between the amounts associated with forward elements of forward contracts and the foreign currency basis spreads of financial instruments that hedge transaction related hedged items, and the amounts associated with forward elements of forward contracts and the foreign currency basis spreads of financial instruments that hedge time-period related hedged items when an entity accounts for those amounts in accordance with paragraph 6.5.16 of Ind AS 109. 24F An entity shall disclose the information required in paragraph 24E separately by risk category. This disaggregation by risk may be provided in the notes to the financial statements. Option to designate a credit exposure as measured at fair value through profit or loss 24G If an entity designated a financial instrument, or a proportion of it, as measured at fair value through profit or loss because it uses a credit derivative to man ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... xposed arising from financial instruments subject to interest rate benchmark reform, and how the entity manages these risks; and (b) the entity s progress in completing the transition to alternative benchmark rates, and how the entity is managing the transition. 24J To meet the objectives in paragraph 24I, an entity shall disclose: (a) how the entity is managing the transition to alternative benchmark rates, its progress at the reporting date and the risks to which it is exposed arising from financial instruments because of the transition; (b) disaggregated by significant interest rate benchmark subject to interest rate benchmark reform, quantitative information about financial instruments that have yet to transition to an alternative benchmark rate as at the end of the reporting period, showing separately: (i) non-derivative financial assets; (ii) non-derivative financial liabilities; and (iii) derivatives; and (c) if the risks identified in paragraph 24J(a) have resulted in changes to an entity s risk management strategy (see paragraph 22A), a description of these changes. ] Fair value 25 Except as set out in paragraph 29, for each class of financ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nstruments because their fair value cannot be measured reliably; (b) a description of the financial instruments, their carrying amount, and an explanation of why fair value cannot be measured reliably; (c) information about the market for the instruments; (d) information about whether and how the entity intends to dispose of the financial instruments; and (e) if financial instruments whose fair value previously could not be reliably measured are derecognised, that fact, their carrying amount at the time of derecognition, and the amount of gain or loss recognised. Nature and extent of risks arising from financial instruments 31 An entity shall disclose information that enables users of its financial statements to evaluate the nature and extent of risks arising from financial instruments to which the entity is exposed at the end of the reporting period. 32 The disclosures required by paragraphs 33 42 focus on the risks that arise from financial instruments and how they have been managed. These risks typically include, but are not limited to, credit risk, liquidity risk and market risk. 32A Providing qualitative disclosures in the context of quantitative ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y of future cash flows. To achieve this objective, credit risk disclosures shall provide: (a) information about an entity s credit risk management practices and how they relate to the recognition and measurement of expected credit losses, including the methods, assumptions and information used to measure expected credit losses; (b) quantitative and qualitative information that allows users of financial statements to evaluate the amounts in the financial statements arising from expected credit losses, including changes in the amount of expected credit losses and the reasons for those changes; and (c) information about an entity s credit risk exposure (ie the credit risk inherent in an entity s financial assets and commitments to extend credit) including significant credit risk concentrations. 35C An entity need not duplicate information that is already presented elsewhere, provided that the information is incorporated by cross-reference from the financial statements to other statements, such as a management commentary or risk report that is available to users of the financial statements on the same terms as the financial statements and at the same time. Without the infor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... was measured at an amount equal to lifetime expected credit losses, has improved to the extent that the loss allowance reverts to being measured at an amount equal to 12-month expected credit losses in accordance with paragraph 5.5.5 of Ind AS 109; and (ii) monitors the extent to which the loss allowance on financial assets meeting the criteria in (i) is subsequently remeasured at an amount equal to lifetime expected credit losses in accordance with paragraph 5.5.3 of Ind AS 109. 35G An entity shall explain the inputs, assumptions and estimation techniques used to apply the requirements in Section 5.5 of Ind AS 109. For this purpose an entity shall disclose: (a) the basis of inputs and assumptions and the estimation techniques used to: (i) measure the 12-month and lifetime expected credit losses; (ii) determine whether the credit risk of financial instruments 20 [ has ] increased significantly since initial recognition; and (iii) determine whether a financial asset is a credit-impaired financial asset. (b) how forward-looking information has been incorporated into the determination of expected credit losses, including the use of macroeconomic information; a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... anges because of financial instruments that were derecognised (including those that were written-off) during the reporting period; and (d) changes arising from whether the loss allowance is measured at an amount equal to 12-month or lifetime expected credit losses. 35J To enable users of financial statements to understand the nature and effect of modifications of contractual cash flows on financial assets that have not resulted in derecognition and the effect of such modifications on the measurement of expected credit losses, an entity shall disclose: (a) the amortised cost before the modification and the net modification gain or loss recognised for financial assets for which the contractual cash flows have been modified during the reporting period while they had a loss allowance measured at an amount equal to lifetime expected credit losses; and (b) the gross carrying amount at the end of the reporting period of financial assets that have been modified since initial recognition at a time when the loss allowance was measured at an amount equal to lifetime expected credit losses and for which the loss allowance has changed during the reporting period to an amount equal t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ting date (but that are not purchased or originated credit-impaired); and (iii) trade receivables, contract assets or lease receivables for which the loss allowances are measured in accordance with paragraph 5.5.15 of Ind AS 109. (c) that are purchased or originated credit-impaired financial assets. 35N For trade receivables, contract assets and lease receivables to which an entity applies paragraph 5.5.15 of Ind AS 109, the information provided in accordance with paragraph 35M may be based on a provision matrix (see paragraph B5.5.35 of Ind AS 109). 36 For all financial instruments within the scope of this Ind AS, but to which the impairment requirements in Ind AS 109 are not applied, an entity shall disclose by class of financial instrument: (a) the amount that best represents its maximum exposure to credit risk at the end of the reporting period without taking account of any collateral held or other credit enhancements (eg netting agreements that do not qualify for offset in accordance with Ind AS 32); this disclosure is not required for financial instruments whose carrying amount best represents the maximum exposure to credit risk. (b) a description of collate ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... interest rates and exchange rates) and uses it to manage financial risks, it may use that sensitivity analysis in place of the analysis specified in paragraph 40. The entity shall also disclose: (a) an explanation of the method used in preparing such a sensitivity analysis, and of the main parameters and assumptions underlying the data provided; and (b) an explanation of the objective of the method used and of limitations that may result in the information not fully reflecting the fair value of the assets and liabilities involved. Other market risk disclosures 42 When the sensitivity analyses disclosed in accordance with paragraph 40 or 41 are unrepresentative of a risk inherent in a financial instrument (for example because the year-end exposure does not reflect the exposure during the year), the entity shall disclose that fact and the reason it believes the sensitivity analyses are unrepresentative. Transfers of financial assets 42A The disclosure requirements in paragraphs 42B 42H relating to transfers of financial assets supplement the other disclosure requirements of this Ind AS. An entity shall present the disclosures required by paragraphs 42B 42H in a si ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ot derecognised in their entirety 42D An entity may have transferred financial assets in such a way that part or all of the transferred financial assets do not qualify for derecognition. To meet the objectives set out in paragraph 42B(a), the entity shall disclose at each reporting date for each class of transferred financial assets that are not derecognised in their entirety: (a) the nature of the transferred assets. (b) the nature of the risks and rewards of ownership to which the entity is exposed. (c) a description of the nature of the relationship between the transferred assets and the associated liabilities, including restrictions arising from the transfer on the reporting entity s use of the transferred assets. (d) when the counterparty (counterparties) to the associated liabilities has (have) recourse only to the transferred assets, a schedule that sets out the fair value of the transferred assets, the fair value of the associated liabilities and the net position (the difference between the fair value of the transferred assets and the associated liabilities). (e) when the entity continues to recognise all of the transferred assets, the carrying amounts of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... involvement in that derecognised financial asset, and report it under one type of continuing involvement. 42G In addition, an entity shall disclose for each type of continuing involvement: (a) the gain or loss recognised at the date of transfer of the assets. (b) income and expenses recognised, both in the reporting period and cumulatively, from the entity s continuing involvement in the derecognised financial assets (eg fair value changes in derivative instruments). (c) if the total amount of proceeds from transfer activity (that qualifies for derecognition) in a reporting period is not evenly distributed throughout the reporting period (eg if a substantial proportion of the total amount of transfer activity takes place in the closing days of a reporting period): (i) when the greatest transfer activity took place within that reporting period (eg the last five days before the end of the reporting period), (ii) the amount (eg related gains or losses) recognised from transfer activity in that part of the reporting period, and (iii) the total amount of proceeds from transfer activity in that part of the reporting period. An entity shall provide this informatio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uctuate because of changes in foreign exchange rates. interest rate risk The risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market interest rates. liquidity risk The risk that an entity will encounter difficulty in meeting obligations associated with financial liabilities that are settled by delivering cash or another financial asset. loans payable Loans payable are financial liabilities, other than short-term trade payables on normal credit terms. market risk The risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market prices. Market risk comprises three types of risk: currency risk, interest rate risk and other price risk . other price risk The risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market prices (other than those arising from interest rate risk or currency risk ), whether those changes are ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ith different characteristics. It is necessary to strike a balance between overburdening financial statements with excessive detail that may not assist users of financial statements and obscuring important information as a result of too much aggregation. For example, an entity shall not obscure important information by including it among a large amount of insignificant detail. Similarly, an entity shall not disclose information that is so aggregated that it obscures important differences between individual transactions or associated risks. B4 [Refer Appendix 1] Other disclosure accounting policies (paragraph 21) 30 [ B5 Paragraph 21 requires disclosure of material accounting policy information, which is expected to include information about the measurement basis (or bases) for financial instruments used in preparing the financial statements. For financial instruments, such disclosure may include: ] (a) for financial liabilities designated as at fair value through profit or loss: (i) the nature of the financial liabilities the entity has designated as at fair value through profit or loss; (ii) the criteria for so designating such financial liabilities on ini ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... B8 Paragraph 34(c) requires disclosures about concentrations of risk. Concentrations of risk arise from financial instruments that have similar characteristics and are affected similarly by changes in economic or other conditions. The identification of concentrations of risk requires judgement taking into account the circumstances of the entity. Disclosure of concentrations of risk shall include: (a) a description of how management determines concentrations; (b) a description of the shared characteristic that identifies each concentration (eg counterparty, geographical area, currency or market); and (c) the amount of the risk exposure associated with all financial instruments sharing that characteristic. Credit risk management practices (paragraphs 35F-35G) B8A Paragraph 35F(b) requires the disclosure of information about how an entity has defined default for different financial instruments and the reasons for selecting those definitions. In accordance with paragraph 5.5.9 of Ind AS 109, the determination of whether lifetime expected credit losses should be recognised is based on the increase in the risk of a default occurring since initial recognition. Information ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... od, including: (a) the portfolio composition; (b) the volume of financial instruments purchased or originated; and (c) the severity of the expected credit losses B8E For loan commitments and financial guarantee contracts the loss allowance is recognised as a provision. An entity should disclose information about the changes in the loss allowance for financial assets separately from those for loan commitments and financial guarantee contracts. However, if a financial instrument includes both a loan (ie financial asset) and an undrawn commitment (ie loan commitment) component and the entity cannot separately identify the expected credit losses on the loan commitment component from those on the financial asset component, the expected credit losses on the loan commitment should be recognised together with the loss allowance for the financial asset. To the extent that the combined expected credit losses exceed the gross carrying amount of the financial asset, the expected credit losses should be recognised as a provision. Collateral (paragraph 35K) B8F Paragraph 35K requires the disclosure of information that will enable users of financial statements to understand th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... information available and an entity uses past due information to assess whether credit risk has increased significantly since initial recognition in accordance with 27 [ paragraph 5.5.11 ] of Ind AS 109, an entity shall provide an analysis by past due status for those financial assets. B8J When an entity has measured expected credit losses on a collective basis, the entity may not be able to allocate the gross carrying amount of individual financial assets or the exposure to credit risk on loan commitments and financial guarantee contracts to the credit risk rating grades for which lifetime expected credit losses are recognised. In that case, an entity should apply the requirement in paragraph 35M to those financial instruments that can be directly allocated to a credit risk rating grade and disclose separately the gross carrying amount of financial instruments for which lifetime expected credit losses have been measured on a collective basis. Maximum credit risk exposure (paragraph 36(a)) B9 Paragraphs 35K(a) and 36(a) require disclosure of the amount that best represents the entity s maximum exposure to credit risk. For a financial asset, this is typically the gross ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed in the contractual maturity analyses required by paragraph 39(a) or (b). B11 In preparing the maturity analyses required by paragraph 39(a) and (b), an entity uses its judgement to determine an appropriate number of time bands. For example, an entity might determine that the following time bands are appropriate: (a) not later than one month; (b) later than one month and not later than three months; (c) later than three months and not later than one year; and (d) later than one year and not later than five years. B11A In complying with paragraph 39(a) and (b), an entity shall not separate an embedded derivative from a hybrid (combined) financial instrument. For such an instrument, an entity shall apply paragraph 39(a). B11B Paragraph 39(b) requires an entity to disclose a quantitative maturity analysis for derivative financial liabilities that shows remaining contractual maturities if the contractual maturities are essential for an understanding of the timing of the cash flows. For example, this would be the case for: (a) an interest rate swap with a remaining maturity of five years in a cash flow hedge of a variable rate financial asset or liability. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aleable or expected to generate cash inflows to meet cash outflows on financial liabilities), if that information is necessary to enable users of its financial statements to evaluate the nature and extent of liquidity risk. B11F Other factors that an entity might consider in providing the disclosure required in paragraph 39(c) include, but are not limited to, whether the entity: (a) has committed borrowing facilities (eg commercial paper facilities) or other lines of credit (eg stand-by credit facilities) that it can access to meet liquidity needs; (b) holds deposits at central banks to meet liquidity needs; (c) has very diverse funding sources; (d) has significant concentrations of liquidity risk in either its assets or its funding sources; (e) has internal control processes and contingency plans for managing liquidity risk; (f) has instruments that include accelerated repayment terms (eg on the downgrade of the entity s credit rating); (g) has instruments that could require the posting of collateral (eg margin calls for derivatives); (h) has instruments that allow the entity to choose whether it settles its financial liabilities by delivering cash (or a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... variable is, an entity should consider: (a) the economic environments in which it operates. A reasonably possible change should not include remote or worst case scenarios or stress tests . Moreover, if the rate of change in the underlying risk variable is stable, the entity need not alter the chosen reasonably possible change in the risk variable. For example, assume that interest rates are 5 per cent and an entity determines that a fluctuation in interest rates of 50 basis points is reasonably possible. It would disclose the effect on profit or loss and equity if interest rates were to change to 4.5 per cent or 5.5 per cent. In the next period, interest rates have increased to 5.5 per cent. The entity continues to believe that interest rates may fluctuate by 50 basis points (ie that the rate of change in interest rates is stable). The entity would disclose the effect on profit or loss and equity if interest rates were to change to 5 per cent or 6 per cent. The entity would not be required to revise its assessment that interest rates might reasonably fluctuate by 50 basis points, unless there is evidence that interest rates have become significantly more volatile. (b) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... decrease in a specified stock market index, commodity price, or other risk variable. For example, if an entity gives residual value guarantees that are financial instruments, the entity discloses an increase or decrease in the value of the assets to which the guarantee applies. B26 Two examples of financial instruments that give rise to equity price risk are (a) a holding of equities in another entity and (b) an investment in a trust that in turn holds investments in equity instruments. Other examples include forward contracts and options to buy or sell specified quantities of an equity instrument and swaps that are indexed to equity prices. The fair values of such financial instruments are affected by changes in the market price of the underlying equity instruments. B27 In accordance with paragraph 40(a), the sensitivity of profit or loss (that arises, for example, from instruments measured at fair value through profit or loss) is disclosed separately from the sensitivity of other comprehensive income (that arises, for example, from investments in equity instruments whose changes in fair value are presented in other comprehensive income ). B28 Financial instruments that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... losure requirements. For example, a servicer will have continuing involvement in the transferred financial asset for the purposes of the disclosure requirements if the servicing fee is dependent on the amount or timing of the cash flows collected from the transferred financial asset. Similarly, a servicer has continuing involvement for the purposes of the disclosure requirements if a fixed fee would not be paid in full because of non-performance of the transferred financial asset. In these examples, the servicer has an interest in the future performance of the transferred financial asset. This assessment is independent of whether the fee to be received is expected to compensate the entity adequately for performing the servicing.] B31 Continuing involvement in a transferred financial asset may result from contractual provisions in the transfer agreement or in a separate agreement with the transferee or a third party entered into in connection with the transfer. Transferred financial assets that are not derecognised in their entirety (paragraph 42D) B32 Paragraph 42D requires disclosures when part or all of the transferred financial assets do not qualify for derecognition. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the continuing involvement retained after transferring those assets. It also includes a description of the risks to which an entity is exposed, including: (a) a description of how the entity manages the risk inherent in its continuing involvement in the derecognised financial assets. (b) whether the entity is required to bear losses before other parties, and the ranking and amounts of losses borne by parties whose interests rank lower than the entity s interest in the asset (ie its continuing involvement in the asset). (c) a description of any triggers associated with obligations to provide financial support or to repurchase a transferred financial asset. Gain or loss on derecognition (paragraph 42G(a)) B38 Paragraph 42G(a) requires an entity to disclose the gain or loss on derecognition relating to financial assets in which the entity has continuing involvement. The entity shall disclose if a gain or loss on derecognition arose because the fair values of the components of the previously recognised asset (ie the interest in the asset derecognised and the interest retained by the entity) were different from the fair value of the previously recognised asset as a wh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ncial liabilities within the scope of paragraph 13A (paragraph 13C) B42 Financial instruments disclosed in accordance with paragraph 13C may be subject to different measurement requirements (for example, a payable related to a repurchase agreement may be measured at amortised cost, while a derivative will be measured at fair value). An entity shall include instruments at their recognised amounts and describe any resulting measurement differences in the related disclosures. Disclosure of the gross amounts of recognised financial assets and recognised financial liabilities within the scope of paragraph 13A (paragraph 13C(a)) B43 The amounts required by paragraph 13C(a) relate to recognised financial instruments that are set-off in accordance with paragraph 42 of Ind AS 32. The amounts required by paragraph 13C(a) also relate to recognised financial instruments that are subject to an enforceable master netting arrangement or similar agreement irrespective of whether they meet the offsetting criteria. However, the disclosures required by paragraph 13C(a) do not relate to any amounts recognised as a result of collateral agreements that do not meet the offsetting criteria in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mounts presented in the balance sheet. Disclosure of the amounts subject to an enforceable master netting arrangement or similar agreement that are not otherwise included in paragraph 13C(b) (paragraph 13C(d)) B47 Paragraph 13C(d) requires that entities disclose amounts that are subject to an enforceable master netting arrangement or similar agreement that are not otherwise included in paragraph 13C(b). Paragraph 13C(d)(i) refers to amounts related to recognised financial instruments that do not meet some or all of the offsetting criteria in paragraph 42 of Ind AS 32 (for example, current rights of set-off that do not meet the criterion in paragraph 42(b) of Ind AS 32, or conditional rights of set-off that are enforceable and exercisable only in the event of default, or only in the event of insolvency or bankruptcy of any of the counterparties). B48 Paragraph 13C(d)(ii) refers to amounts related to financial collateral, including cash collateral, both received and pledged. An entity shall disclose the fair value of those financial instruments that have been pledged or received as collateral. The amounts disclosed in accordance with paragraph 13C(d)(ii) should relate to t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ounterparty C, etc) shall remain consistent from year to year for the years presented to maintain comparability. Qualitative disclosures shall be considered so that further information can be given about the types of counterparties. When disclosure of the amounts in paragraph 13C(c) (e) is provided by counterparty, amounts that are individually significant in terms of total counterparty amounts shall be separately disclosed and the remaining individually insignificant counterparty amounts shall be aggregated into one line item. Other B53 The specific disclosures required by paragraphs 13C 13E are minimum requirements. To meet the objective in paragraph 13B an entity may need to supplement them with additional (qualitative) disclosures, depending on the terms of the enforceable master netting arrangements and related agreements, including the nature of the rights of set-off, and their effect or potential effect on the entity s financial position. Appendix C References to matters contained in other Indian Accounting Standards This Appendix is an integral part of the Ind AS. This appendix lists the appendices which are part of other Indian Accounting Stan ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... paragraph 24 (x) paragraph 27-27B (xi) paragraph 29(b) (xii) paragraph 36 (c)-(d) (xiii) paragraph 37 (xiv) paragraph B4 of Appendix B (xv) paragraph B5 (b), (d), (f) (g) (xvi) paragraphs B12-B16 of Appendix B 16 [ 5 Paragraphs 42I-42S of IFRS 7 have not been included in Ind AS 107 as these paragraphs relate to initial application of IFRS 9 which are not relevant in Indian context. Paragraphs 43-44BB related to effective date and transition given in IFRS 7 have not been given in Ind AS 107 since it is not relevant in Indian context. However, in order to maintain consistency with paragraph numbers of IFRS 7, these paragraph numbers are retained in Ind AS 107. Paragraph 44DD relates to IFRS 17, Insurance Contracts, for which corresponding Ind AS is under formulation. ] ******************** Notes:- 1. Substituted vide F. No. 01/01/2009-CL-V(Part) - Dated 30-3-2016 before it was read as, 5A The credit risk disclosure requirements in paragraph 35A 35N apply to those rights that Ind AS 115 Revenue from Contracts with Customers specifies are accounted for in accordance with Ind AS 109 for the purpo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... V(Part) - Dated 30-3-2016 7. Substituted vide F. No. 01/01/2009-CL-V(Part) - Dated 30-3-2016 before it was read as, 2. Appendix C, Service Concession Arrangements, contained in Ind AS 115, Revenue from Contracts with Customers 8. Substituted vide F. No. 01/01/2009-CL-V(Part VI) Dated 28-03-2018 , w.e.f. 1st day of April, 2018, before it was read as, 1 [ 5A The credit risk disclosure requirements in paragraph 35A 35N apply to those rights that Ind AS 18, Revenue specifies are accounted for in accordance with Ind AS 109 for the purposes of recognising impairment gains or losses. Any reference to financial assets or financial instruments in these paragraphs shall include those rights unless otherwise specified ] 9. Substituted vide F. No. 01/01/2009-CL-V(Part VI) Dated 28-03-2018 , w.e.f. 1st day of April, 2018, before it was read as, 7 [ 2. Appendix A, Service Concession Arrangements, contained in Ind AS 11, Construction Contracts. ] 10. Substituted vide NOTIFICATION No. [F. No. 01/01/2009-CL-V-(Part VII)] dated 30-03-2019 w. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... read as paragraph 35F(f)(i) requires 27. Substituted vide NOTIFICATION NO. G.S.R. 419(E) dated 18-06-2021 before it was read as paragraph 5.5.10 28. Substituted vide Notification G.S.R. 242(E), dated 31.03.2023 w.e.f. 01.04.2023, before it was read as, 2 [ 21 In accordance with paragraph 117 of Ind AS 1, Presentation of Financial Statements, an entity discloses its significant accounting policies, comprising 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. ] 29. Inserted vide Notification G.S.R. 242(E), dated 31.03.2023 w.e.f. 01.04.2023, 30. Substituted vide Notification G.S.R. 242(E), dated 31.03.2023 w.e.f. 01.04.2023, before it was read as, 3 [B5 Paragraph 21 requires disclosure of 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 financial instruments, such disclosure may include:] 31.Substituted vide Notification G.S.R. 242(E), dated 31.03.2023 w.e.f. 01.04 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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