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Financial Instruments: Disclosures

Ind AS - 107 - Rules - B. Indian Accounting Standards (Ind AS) - Companies (Indian Accounting Standards) Rules, 2015 - Ind AS - 107 - Indian Accounting Standard (Ind AS) 107 (This Indian Accounting Standard includes paragraphs set in bold type and plain type, which have equal authority. Paragraphs in bold type indicate the main principles.) Objective 1 The objective of this Indian Accounting Standard (Ind AS) is to require entities to provide disclosures in their financial statements that enable .....

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: Presentation, and Ind AS 109, Financial Instruments. Scope 3 This Ind AS 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 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 .....

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rom 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 requires the entity to account for them separately. Moreover, an issuer shall apply this Ind AS to financial guarantee contracts if the issuer applies Ind AS 109 in recognising and measuring the contracts, but shall apply Ind AS 10 .....

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2. 4 This Ind AS applies to recognised and unrecognised financial instruments. Recognised financial instruments include financial assets and financial liabilities that are within the scope of Ind AS 109. Unrecognised financial instruments include some financial instruments that, although outside the scope of Ind AS 109, are within the scope of this Ind AS. 5 This Ind AS applies to contracts to buy or sell a non-financial item that are within the scope of Ind AS 109. 8[5A The credit risk disclosu .....

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t, 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 .....

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of Ind AS 109 and (ii) those mandatorily measured at fair value through profit or loss in accordance with Ind AS 109. (b)- [Refer Appendix 1] (d) (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 .....

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s designated as measured at fair value through profit or loss a financial asset (or group of financial assets) that would otherwise be measured at fair value through other comprehensive income or amortised cost, it shall disclose: (a) the maximum exposure to credit risk (see paragraph 36(a)) of the financial asset (or group of financial assets) at the end of the reporting period. (b) the amount by which any related credit derivatives or similar instruments mitigate that maximum exposure to credi .....

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ts 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 financial asset was designated. 10 If the entity has designated a fin .....

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ng the effects of changes in a liability s credit risk). (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 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 derecog .....

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ributable 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 holder of the obligation. 11 The entity shall also disclose: (a) a detailed description of the methods used to comply with the requirements in paragraphs 9(c .....

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this conclusion and the factors it believes are relevant. (c) a detailed description of the methodology or methodologies used to determine whether presenting the effects of changes in a liability s credit risk in other comprehensive income would create or enlarge an accounting mismatch in profit or loss (see paragraphs 5.7.7 and 5.7.8 of Ind AS 109). If an entity is required to present the effects of changes in a liability s credit risk in profit or loss (see paragraph 5.7.8 of Ind AS 109), the .....

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value through other comprehensive income. (b) the reasons for using this presentation alternative. (c) the fair value of each such investment at the end of the reporting period. (d) dividends recognised during the period, showing separately those related to investments derecognised during the reporting period and those related to investments held at the end of the reporting period. (e) any transfers of the cumulative gain or loss within equity during the period including the reason for such tran .....

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ets 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 o .....

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through profit or loss category so that they are measured at amortised cost or fair value through other comprehensive income it shall disclose: (a) the fair value of the financial assets at the end of the reporting period; and (b) 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 had not been reclassified. 13 [Refer Appendix 1] Offsetting financial assets and financial liabilities 13A T .....

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able users of its financial statements to evaluate the effect or potential effect of netting arrangements on the entity s financial position. This includes the effect or potential effect of rights of set-off associated with the entity s recognised financial assets and recognised financial liabilities that are within the scope of paragraph 13A. 13C To meet the objective in paragraph 13B, an entity shall disclose, at the end of the reporting period, the following quantitative information separatel .....

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rangement or similar agreement that are not otherwise included in paragraph 13C(b), including: (i) amounts related to recognised financial instruments that do not meet some or all of the offsetting criteria in paragraph 42 of Ind AS 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 fo .....

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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 contingent liabilities, including amounts that have been reclassified in accordance with paragraph3.2.23(a) .....

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ollateral. Allowance account for credit losses 16 [Refer Appendix 1] 16A The carrying amount of financial assets measured at fair value through other comprehensive income in accordance with paragraph 4.1.2A of Ind AS 109 is not reduced by a loss allowance and an entity shall not present the loss allowance separately in the balance sheet as a reduction of the carrying amount of the financial asset. However, an entity shall disclose the loss allowance in the notes to the financial statements. Comp .....

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ils of any defaults during the period of principal, interest, sinking fund, or redemption terms of those loans payable; (b) the carrying amount of the loans payable in default at the end of the reporting period; and (c) whether the default was remedied, or the terms of the loans payable were renegotiated, before the financial statements were approved for issue. 19 If, during the period, there were breaches of loan agreement terms other than those described in paragraph 18, an entity shall disclo .....

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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 .....

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of Ind AS 109. (viii) financial assets measured at fair value through other comprehensive income in accordance with paragraph 4.1.2A of Ind AS 109, showing separately the amount of gain or loss recognised in other comprehensive income during the period and the amount reclassified upon derecognition from accumulated other comprehensive income to profit or loss for the period. (b) total interest revenue and total interest expense (calculated using the effective interest method) for financial asse .....

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trust and other fiduciary activities that result in the holding or investing of assets on behalf of individuals, trusts, retirement benefit plans, and other institutions. (d)-(e) [Refer Appendix] 1 20A An entity shall disclose an analysis of the gain or loss recognised in the statement of profit and loss arising from the derecognition of financial assets measured at amortised cost, showing separately gains and losses arising from derecognition of those financial assets. This disclosure shall in .....

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irements in paragraphs 21B-24F for those risk exposures that an entity hedges and for which it elects to apply hedge accounting. Hedge accounting disclosures shall provide information about: (a) an entity s risk management strategy and how it is applied to manage risk; (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 state .....

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s 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 disclosures. 21D To meet the objectives in p .....

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n in this Ind AS and Ind AS 113, Fair Value Measurement. The risk management strategy 22 [Refer Appendix 1] 22A An entity shall explain its risk management strategy for each risk category of risk exposures that it decides to hedge and for which hedge accounting is applied. This explanation should enable users of financial statements to evaluate (for example): (a) how each risk arises. (b) how the entity manages each risk; this includes whether the entity hedges an item in its entirety for all ri .....

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how the entity establishes the hedge ratio and what the sources of hedge ineffectiveness are. 22C When an entity designates a specific risk component as a hedged item (see paragraph 6.3.7 of Ind AS 109) it shall provide, in addition to the disclosures required by paragraphs 22A and 22B, qualitative or quantitative information about: (a) how the entity determined the risk component that is designated as the hedged item (including a description of the nature of the relationship between the risk c .....

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itions 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) .....

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ation to those hedging relationships; (ii) a description of how it reflects its risk management strategy by using hedge accounting and designating those particular hedging relationships; and (iii) an indication of how frequently the hedging relationships are discontinued and restarted as part of the entity s process in relation to those hedging relationships. 23D An entity shall disclose by risk category a description of the sources of hedge ineffectiveness that are expected to affect the hedgin .....

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endix 1] 24A An entity shall disclose, in a tabular format, the following amounts related to items designated as hedging instruments separately by risk category for each type of hedge (fair value hedge, cash flow hedge or hedge of a net investment in a foreign operation): (a) the carrying amount of the hedging instruments (financial assets separately from financial liabilities); (b) the line item in the balance sheet that includes the hedging instrument; (c) the change in fair value of the hedgi .....

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ities); (ii) the accumulated amount of fair value hedge adjustments on the hedged item included in the carrying amount of the hedged item recognised in the balance sheet (presenting assets separately from liabilities); (iii) the line item in the balance sheet that includes the hedged item; (iv) the change in value of the hedged item 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 .....

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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 hedge .....

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e ineffectiveness. (b) for cash flow hedges and hedges of a net investment in a foreign operation: (i) hedging gains or losses of the reporting period that were recognised in other comprehensive income; (ii) hedge ineffectiveness recognised in profit or loss; (iii) the line item in the statement of profit and loss that includes the recognised hedge ineffectiveness; (iv) the amount reclassified from the cash flow hedge reserve or the foreign currency translation reserve into profit or loss as a r .....

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ate line item in the statement of profit and loss (see paragraph 6.6.4 of Ind AS 109). 24D When the volume of hedging relationships to which the exemption in paragraph 23C applies is unrepresentative of normal volumes during the period (ie the volume at the reporting date does not reflect the volumes during the period) an entity shall disclose that fact and the reason it believes the volumes are unrepresentative. 24E An entity shall provide a reconciliation of each component of equity and an ana .....

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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 ti .....

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rough profit or loss because it uses a credit derivative to manage the credit risk of that financial instrument it shall disclose: (a) for credit derivatives that have been used to manage the credit risk of financial instruments designated as measured at fair value through profit or loss in accordance with paragraph 6.7.1 of Ind AS 109, a reconciliation of each of the nominal amount and the fair value at the beginning and at the end of the period; (b) the gain or loss recognised in profit or los .....

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information in accordance with Ind AS 1, an entity does not need to continue this disclosure in subsequent periods). Fair value 25 Except as set out in paragraph 29, for each class of financial assets and financial liabilities (see paragraph 6), an entity shall disclose the fair value of that class of assets and liabilities in a way that permits it to be compared with its carrying amount. 26 In disclosing fair values, an entity shall group financial assets and financial liabilities into classes, .....

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of Ind AS 109). In such cases, the entity shall disclose by class of financial asset or financial liability: (a) its accounting policy for recognising in profit or loss the difference between the fair value at initial recognition and the transaction price to reflect a change in factors (including time) that market participants would take into account when pricing the asset or liability (see paragraph B5.1.2A(b) of Ind AS 109). (b) the aggregate difference yet to be recognised in profit or loss a .....

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ix 1] (c) for a contract containing a discretionary participation feature (as described in Ind AS 104) if the fair value of that feature cannot be measured reliably. 30 In the case described in paragraph 29(c), an entity shall disclose information to help users of the financial statements make their own judgements about the extent of possible differences between the carrying amount of those contracts and their fair value, including: (a) the fact that fair value information has not been disclosed .....

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g 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 b .....

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ty s exposure to risks. Qualitative disclosures 33 For each type of risk arising from financial instruments, an entity shall disclose: (a) the exposures to risk and how they arise; (b) its objectives, policies and processes for managing the risk and the methods used to measure the risk; and (c) any changes in (a) or (b) from the previous period. Quantitative disclosures 34 For each type of risk arising from financial instruments, an entity shall disclose: (a) summary quantitative data about its .....

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If the quantitative data disclosed as at the end of the reporting period are unrepresentative of an entity s exposure to risk during the period, an entity shall provide further information that is representative. Credit risk Scope and objectives 35A An entity shall apply the disclosure requirements in paragraphs 35F-35N to financial instruments to which the impairment requirements in Ind AS 109 are applied. However: (a) for trade receivables, contract assets and lease receivables, paragraph 35J .....

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uncertainty 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 .....

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tatements, 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. 35D To meet the objectives in paragraph 35B, an entity shall (except as otherwise specified) consider how much detail to disclose, how much emphasis to place on different aspects of the disclosure requirements, the approp .....

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hey relate to the recognition and measurement of expected credit losses. To meet this objective an entity shall disclose information that enables users of financial statements to understand and evaluate: (a) how an entity determined whether the credit risk of financial instruments has increased significantly since initial recognition, including, if and how: (i) financial instruments are considered to have low credit risk in accordance with paragraph 5.5.10 of Ind AS 109, including the classes of .....

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assets are credit-impaired financial assets; (e) an entity s write-off policy, including the indicators that there is no reasonable expectation of recovery and information about the policy for financial assets that are written-off but are still subject to enforcement activity; and (f) how the requirements in paragraph 5.5.12 of Ind AS 109 for the modification of contractual cash flows of financial assets have been applied, including how an entity: (i) determines whether the credit risk on a fina .....

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cordance 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 have increased significantly since initial recognition; and (iii) de .....

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lowance and the reasons for those changes, an entity shall provide, by class of financial instrument, a reconciliation from the opening balance to the closing balance of the loss allowance, in a table, showing separately the changes during the period for: (a) the loss allowance measured at an amount equal to 12-month expected credit losses; (b) the loss allowance measured at an amount equal to lifetime expected credit losses for: (i) financial instruments for which credit risk has increased sign .....

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sclose the total amount of undiscounted expected credit losses at initial recognition on financial assets initially recognised during the reporting period. 35I To enable users of financial statements to understand the changes in the loss allowance disclosed in accordance with paragraph 35H, an entity shall provide an explanation of how significant changes in the gross carrying amount of financial instruments during the period contributed to changes in the loss allowance. The information shall be .....

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result in a derecognition of those financial assets in accordance with Ind AS 109; (c) changes 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 t .....

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orting 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 to 12-month expected credit losses. 35K To enable users of financial statements to understand the effect of collateral and other credit enhancements on the amounts arising from expected credit losses, an entity shall disclo .....

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significant changes in the quality of that collateral or credit enhancements as a result of deterioration or changes in the collateral policies of the entity during the reporting period; and (iii) information about financial instruments for which an entity has not recognised a loss allowance because of the collateral. (c) quantitative information about the collateral held as security and other credit enhancements (for example, quantification of the extent to which collateral and other credit enh .....

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des, the gross carrying amount of financial assets and the exposure to credit risk on loan commitments and financial guarantee contracts. This information shall be provided separately for financial instruments: (a) for which the loss allowance is measured at an amount equal to 12-month expected credit losses; (b) for which the loss allowance is measured at an amount equal to lifetime expected credit losses and that are: (i) financial instruments for which credit risk has increased significantly .....

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s 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 wit .....

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) in respect of the amount that best represents the maximum exposure to credit risk (whether disclosed in accordance with (a) or represented by the carrying amount of a financial instrument). (c) [Refer Appendix 1] (d) [Refer Appendix 1] Financial assets that are either past due or impaired [Refer Appendix 1]. Collateral and other credit enhancements obtained 38 When an entity obtains financial or non-financial assets during the period by taking possession of collateral it holds as security or c .....

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ued financial guarantee contracts) that shows the remaining contractual maturities. (b) a maturity analysis for derivative financial liabilities. The maturity analysis shall include the remaining contractual maturities for those derivative financial liabilities for which contractual maturities are essential for an understanding of the timing of the cash flows (see paragraph B11B). (c) a description of how it manages the liquidity risk inherent in (a) and (b). Market risk Sensitivity analysis 40 .....

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sons for such changes. 41 If an entity prepares a sensitivity analysis, such as value-at-risk, that reflects interdependencies between risk variables (eg 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 .....

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he 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 single note in its financial statements. An entity shall provide the required disclosures for all transferred financial assets that are not derecognised and for any con .....

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cial asset, but assumes a contractual obligation to pay the cash flows to one or more recipients in an arrangement. 42B An entity shall disclose information that enables users of its financial statements: (a) to understand the relationship between transferred financial assets that are not derecognised in their entirety and the associated liabilities; and (b) to evaluate the nature of, and risks associated with, the entity s continuing involvement in derecognised financial assets. 42C For the pur .....

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olvement: (a) normal representations and warranties relating to fraudulent transfer and concepts of reasonableness, good faith and fair dealings that could invalidate a transfer as a result of legal action; (b) forward, option and other contracts to reacquire the transferred financial asset for which the contract price (or exercise price) is the fair value of the transferred financial asset; or (c) an arrangement whereby an entity retains the contractual rights to receive the cash flows of a fin .....

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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 liabilit .....

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extent of its continuing involvement (see paragraphs 3.2.6(c)(ii) and 3.2.16 of Ind AS 109), the total carrying amount of the original assets before the transfer, the carrying amount of the assets that the entity continues to recognise, and the carrying amount of the associated liabilities. Transferred financial assets that are derecognised in their entirety 42E To meet the objectives set out in paragraph 42B(b), when an entity derecognizes transferred financial assets in their entirety (see pa .....

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e assets and liabilities that represent the entity s continuing involvement in the derecognised financial assets. (c) the amount that best represents the entity s maximum exposure to loss from its continuing involvement in the derecognised financial assets, and information showing how the maximum exposure to loss is determined. (d) the undiscounted cash outflows that would or may be required to repurchase derecognised financial assets (eg the strike price in an option agreement) or other amounts .....

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alitative information that explains and supports the quantitative disclosures required in (a)-(e). 42F An entity may aggregate the information required by paragraph 42E in respect of a particular asset if the entity has more than one type of continuing 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 .....

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ays 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 information for each period for which a statement of profit and loss is presented. .....

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on the financial instrument. currency risk The risk that the fair value or future cash flows of a financial instrument will fluctuate 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 .....

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changes in market prices (other than those arising from interest rate risk or currency risk), whether those changes are caused by factors specific to the individual financial instrument or its issuer or by factors affecting all similar financial instruments traded in the market. The following terms are defined in paragraph 11 of Ind AS 32, Appendix A of Ind AS 109 or Appendix A of Ind AS 113 and are used in this Ind AS with the meaning specified in Ind AS 32, Ind AS 109 and Ind AS 113. amortised .....

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redit-impaired financial assets reclassification date regular way purchase or sale Appendix B Application guidance This appendix is an integral part of the Ind AS. Classes of financial instruments and level of disclosure (paragraph 6) B1 Paragraph 6 requires an entity to 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. The classes described in paragraph 6 are det .....

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entity decides, in the light of its circumstances, how much detail it provides to satisfy the requirements of this Ind AS, how much emphasis it places on different aspects of the requirements and how it aggregates information to display the overall picture without combining information with 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 infor .....

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ng 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:] (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 initial recognition; and (iii) how the entity has .....

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de date or at settlement date (see paragraph 3.1.2 of Ind AS 109). (d) [Refer Appendix 1] (e) how net gains or net losses on each category of financial instrument are determined (see paragraph 20(a)), for example, whether the net gains or net losses on items at fair value through profit or loss include interest or dividend income. (f)-(g) [Refer Appendix 1] 4[Paragraph 122 of Ind AS 1 also requires entities to disclose, along with its significant accounting policies or other notes, the judgement .....

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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. Quantitative disclosures (paragraph 34) B7 Paragraph 34(a) requires disclosures of summary quantitative data about an entity s exposure to risks based on the information provided internally to key management personnel of the entity. Whe .....

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omic 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 charact .....

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initions of default that will assist users of financial statements in understanding how an entity has applied the expected credit loss requirements in Ind AS 109 may include: (a) the qualitative and quantitative factors considered in defining default; (b) whether different definitions have been applied to different types of financial instruments; and (c) assumptions about the cure rate (ie the number of financial assets that return to a performing status) after a default occurred on the financia .....

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sers in understanding the subsequent increase in credit risk of modified financial assets may include information about modified financial assets meeting the criteria in paragraph 35F(f)(i) for which the loss allowance has reverted to being measured at an amount equal to lifetime expected credit losses (ie a deterioration rate). B8C Paragraph 35G(a) requires the disclosure of information about the basis of inputs and assumptions and the estimation techniques used to apply the impairment requirem .....

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the changes in the loss allowance during the period. In addition to the reconciliation from the opening balance to the closing balance of the loss allowance, it may be necessary to provide a narrative explanation of the changes. This narrative explanation may include an analysis of the reasons for changes in the loss allowance during the period, including: (a) the portfolio composition; (b) the volume of financial instruments purchased or originated; and (c) the severity of the expected credit l .....

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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 sta .....

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e information about: (a) the main types of collateral held as security and other credit enhancements (examples of the latter being guarantees, credit derivatives and netting agreements that do not qualify for offset in accordance with Ind AS 32); (b) the volume of collateral held and other credit enhancements and its significance in terms of the loss allowance; (c) the policies and processes for valuing and managing collateral and other credit enhancements; (d) the main types of counterparties t .....

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n similar activities and have similar economic characteristics that would cause their ability to meet contractual obligations to be similarly affected by changes in economic or other conditions. An entity should provide information that enables users of financial statements to understand whether there are groups or portfolios of financial instruments with particular features that could affect a large portion of that group of financial instruments such as concentration to particular risks. This c .....

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significantly since initial recognition in accordance with paragraph 5.5.10 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 credi .....

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xposure to credit risk. For a financial asset, this is typically the gross carrying amount, net of: (a) any amounts offset in accordance with Ind AS 32; and (b) any loss allowance recognised in accordance with Ind AS 109. B10 Activities that give rise to credit risk and the associated maximum exposure to credit risk include, but are not limited to: (a) granting loans to customers and placing deposits with other entities. In these cases, the maximum exposure to credit risk is the carrying amount .....

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ater than the amount recognised as a liability. (d) making a loan commitment that is irrevocable over the life of the facility or is revocable only in response to a material adverse change. If the issuer cannot settle the loan commitment net in cash or another financial instrument, the maximum credit exposure is the full amount of the commitment. This is because it is uncertain whether the amount of any undrawn portion may be drawn upon in the future. This may be significantly greater than the a .....

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cated in the data, or (b) be for significantly different amounts from those indicated in the data (eg for a derivative that is included in the data on a net settlement basis but for which the counterparty has the option to require gross settlement), the entity shall state that fact and provide quantitative information that enables users of its financial statements to evaluate the extent of this risk unless that information is included in the contractual maturity analyses required by paragraph 39 .....

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(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 wi .....

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xample, financial liabilities that an entity can be required to repay on demand (eg demand deposits) are included in the earliest time band. (b) when an entity is committed to make amounts available in instalments, each instalment is allocated to the earliest period in which the entity can be required to pay. For example, an undrawn loan commitment is included in the time band containing the earliest date it can be drawn down. (c) for issued financial guarantee contracts the maximum amount of th .....

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xchanged; (d) contractual amounts to be exchanged in a derivative financial instrument (eg a currency swap) for which gross cash flows are exchanged; and (e) gross loan commitments. Such undiscounted cash flows differ from the amount included in the balance sheet because the amount in balance sheet is based on discounted cash flows. When the amount payable is not fixed, the amount disclosed is determined by reference to the conditions existing at the end of the reporting period. For example, whe .....

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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 .....

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s for derivatives); (h) has instruments that allow the entity to choose whether it settles its financial liabilities by delivering cash (or another financial asset) or by delivering its own shares; or (i) has instruments that are subject to master netting agreements. B12-B16 [Refer Appendix 1] Market risk - sensitivity analysis (paragraphs 40 and 41) B17 Paragraph 40(a) requires a sensitivity analysis for each type of market risk to which the entity is exposed. In accordance with paragraph B3, a .....

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sure to the same market risks from areas of very low inflation. If an entity has exposure to only one type of market risk in only one economic environment, it would not show disaggregated information. B18 Paragraph 40(a) requires the sensitivity analysis to show the effect on profit or loss and equity of reasonably possible changes in the relevant risk variable (eg prevailing market interest rates, currency rates, equity prices or commodity prices). For this purpose: (a) entities are not require .....

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would disclose the effect on profit or loss (ie interest expense) for the current year if interest rates had varied by reasonably possible amounts. (b) entities are not required to disclose the effect on profit or loss and equity for each change within a range of reasonably possible changes of the relevant risk variable. Disclosure of the effects of the changes at the limits of the reasonably possible range would be sufficient. B19 In determining what a reasonably possible change in the relevan .....

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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 e .....

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20 Paragraph 41 permits an entity to use a sensitivity analysis that reflects interdependencies between risk variables, such as a value-at-risk methodology, if it uses this analysis to manage its exposure to financial risks. This applies even if such a methodology measures only the potential for loss and does not measure the potential for gain. Such an entity might comply with paragraph 41(a) by disclosing the type of value-at-risk model used (eg whether the model relies on Monte Carlo simulatio .....

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ess, but may provide different types of sensitivity analysis for different classes of financial instruments. Interest rate risk B22 Interest rate risk arises on interest-bearing financial instruments recognised in the balance sheet (eg debt instruments acquired or issued) and on some financial instruments not recognised in the balance sheet (eg some loan commitments). Currency risk B23 Currency risk (or foreign exchange risk) arises on financial instruments that are denominated in a foreign curr .....

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equity prices. To comply with paragraph 40, an entity might disclose the effect of a 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) a .....

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alue 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 an entity classifies as equity instruments are not remeasured. Neither profit or loss nor equity will be affected by the equity price risk of those instruments. Accordingly, no sensitivity analysis is required. Derecognition .....

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ontinuing involvement in the transferred asset in its separate or individual financial statements (ie when the subsidiary is the reporting entity). However, a parent would include its continuing involvement (or that of another member of the group) in a financial asset transferred by its subsidiary in determining whether it has continuing involvement in the transferred asset in its consolidated financial statements (ie when the reporting entity is the group). 5[B30 An entity does not have a conti .....

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ces to make payments in respect of the transferred financial asset in the future. The term payment in this context does not include cash flows of the transferred financial asset that an entity collects and is required to remit to the transferee.] 6[B30A When an entity transfers a financial asset, the entity may retain the right to service that financial asset for a fee that is included in, for example, a servicing contract. The entity assesses the servicing contract in accordance with the guidan .....

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s 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 tra .....

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fers occurred. Types of continuing involvement (paragraphs 42E-42H) B33 Paragraphs 42E-42H require qualitative and quantitative disclosures for each type of continuing involvement in derecognised financial assets. An entity shall aggregate its continuing involvement into types that are representative of the entity s exposure to risks. For example, an entity may aggregate its continuing involvement by type of financial instrument (eg guarantees or call options) or by type of transfer (eg factorin .....

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distinguishes cash flows that are required to be paid (eg forward contracts), cash flows that the entity may be required to pay (eg written put options) and cash flows that the entity might choose to pay (eg purchased call options). B35 An entity shall use its judgement to determine an appropriate number of time bands in preparing the maturity analysis required by paragraph 42E(e). For example, an entity might determine that the following maturity time bands are appropriate: (a) not later than .....

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litative information (paragraph 42E(f)) B37 The qualitative information required by paragraph 42E(f) includes a description of the derecognised financial assets and the nature and purpose of 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 i .....

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o 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 whole. In that situation, the entity shall also disclose whether the fair value measurements included significant inputs that were .....

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n needs of users and how much emphasis it places on different aspects of the additional information. It is necessary to strike a balance between burdening financial statements with excessive detail that may not assist users of financial statements and obscuring information as a result of too much aggregation. Offsetting financial assets and financial liabilities (paragraphs 13A-13F). Scope (paragraph 13A) B40 The disclosures in paragraphs 13B-13E are required for all recognised financial instrum .....

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ude derivative clearing agreements, global master repurchase agreements, global master securities lending agreements, and any related rights to financial collateral. The similar financial instruments and transactions referred to in paragraph B40 include derivatives, sale and repurchase agreements, reverse sale and repurchase agreements, securities borrowing, and securities lending agreements. Examples of financial instruments that are not within the scope of paragraph 13A are loans and customer .....

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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 .....

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e disclosed in accordance with paragraph 13C(d). Disclosure of the amounts that are set-off in accordance with the criteria in paragraph 42 ofInd AS 32 (paragraph 13C(b)) B44 Paragraph 13C(b) requires that entities disclose the amounts set-off in accordance with paragraph 42 of Ind AS 32 when determining the net amounts presented in the balance sheet. The amounts of both the recognised financial assets and the recognised financial liabilities that are subject to set-off under the same arrangemen .....

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able will include the entire amount of the derivative asset (in accordance with paragraph 13C(a)) and the entire amount of the derivative liability (in accordance with paragraph 13C(b)). However, while the financial liability disclosure table will include the entire amount of the derivative liability (in accordance with paragraph 13C(a)), it will only include the amount of the derivative asset (in accordance with paragraph 13C(b)) that is equal to the amount of the derivative liability. Disclosu .....

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sented in the balance sheet. For example, if an entity determines that the aggregation or disaggregation of individual financial statement line item amounts provides more relevant information, it must reconcile the aggregated or disaggregated amounts disclosed in paragraph 13C(c) back to the individual line item amounts 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 1 .....

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itional 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 .....

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ed in accordance with paragraph 13C(c). The entity shall then limit the amounts disclosed in accordance with paragraph 13C(d)(ii) to the remaining amount in paragraph 13C(c) for the related financial instrument. However, if rights to collateral can be enforced across financial instruments, such rights can be included in the disclosure provided in accordance with paragraph 13D. Description of the rights of set-off subject to enforceable master netting arrangements and similar agreements (paragrap .....

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eceived or pledged, the entity shall describe the terms of the collateral agreement (for example, when the collateral is restricted). Disclosure by type of financial instrument or by counterparty B51 The quantitative disclosures required by paragraph 13C(a)-(e) may be grouped by type of financial instrument or transaction (for example, derivatives, repurchase and reverse repurchase agreements or securities borrowing and securities lending agreements). B52 Alternatively, an entity may group the q .....

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e 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 requirement .....

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which are part of other Indian Accounting Standards and makes reference to Ind AS 107, . 1. Appendix A, Distributions of Non-cash Assets to Owners, contained in Ind AS 10, Events After the Reporting Period 9[2. Appendix D, Service Concession Arrangements, contained in Ind AS 115, Revenue from Contracts with Customers.] Appendix 1 Note: This Appendix is not a part of the Indian Accounting Standard. The purpose of this Appendix is only to bring out the major differences, if any, between Indian Ac .....

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ial Reporting Standards. 2 Different terminology is used, as used in existing laws eg, the term balance sheet is used instead of Statement of financial position and Statement of profit and loss is used instead of Statement of comprehensive income . Words approved for issue have been used instead of authorised for issue in the context of financial statements considered for the purpose of events after the reporting period. 3 Requirements regarding disclosure of description of gains and losses pres .....

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aph numbers of Ind 107, the paragraph numbers are retained in Ind AS 107 : (i) paragraph 3(c) (ii) paragraph 8(b)-(d) (iii) paragraph 12-12A (iv) paragraph 13 (v) paragraph 16 (vi) paragraph 20(a) (ii)-(iv) and 20(d)-(e) (vii) paragraph 22 (viii) paragraph 23 (ix) 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 ******************* .....

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ituted vide F. No. 01/01/2009-CL-V(Part) - Dated 30-3-2016 before it was read as, 21 In accordance with paragraph 117 of Ind 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. 3. Substituted vide F. No. 01/01/2009-CL-V(Part) - Dated 30-3-2016 before it w .....

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notes, the judgements, apart from those involving estimations, that management has made in the process of applying the entity s accounting policies and that have the most significant effect on the amounts recognised in the financial statements. 5. Substituted vide F. No. 01/01/2009-CL-V(Part) - Dated 30-3-2016 before it was read as, B30 An entity does not have a continuing involvement in a transferred financial asset if, as part of the transfer, it neither retains any of the contractual rights o .....

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