Basic Financial Instruments 5

Disclosures

Disclosures for financial liabilities measured at fair value through profit or loss

The following disclosures make reference to disclosures for financial liabilities measured at fair value through profit or loss. Entities that have only basic financial instruments (and therefore do not apply Other Financial Instrument Issues ) will not have any financial liabilities measured at fair value through profit or loss and hence will not need to provide such disclosures.

Disclosure of accounting policies for financial instruments

In accordance with Disclosure of accounting policies, an entity shall disclose, in the summary of significant accounting policies, the measurement basis (or bases) used for financial instruments and the other accounting policies used for financial instruments that are relevant to an understanding of the financial statements.

Statement of financial position – categories of financial assets and financial liabilities

An entity shall disclose the carrying amounts of each of the following categories of financial assets and financial liabilities at the reporting date, in total, either in the statement of financial position or in the notes:

  1. financial assets measured at fair value through profit or loss (Subsequent measurement (c)(i) (in Basic Financial Instruments – 2) and Subsequent measurement (in Other Financial Instrument Issues – 1) and Reliable measure of fair value no longer available (in Other Financial Instrument Issues – 1));
  2. financial assets that are debt instruments measured at amortised cost (Subsequent measurement (a) (in Basic Financial Instruments – 2));
  3. financial assets that are equity instruments measured at cost less impairment (Subsequent measurement (c)(ii) (in Basic Financial Instruments – 2) and paragraphs Subsequent measurement (in Other Financial Instrument Issues – 1) and Reliable measure of fair value no longer available (in Other Financial Instrument Issues – 1));
  4. financial liabilities measured at fair value through profit or loss (Subsequent measurement (in Other Financial Instrument Issues – 1) and Reliable measure of fair value no longer available (in Other Financial Instrument Issues – 1));
  5. financial liabilities measured at amortised cost (Subsequent measurement (a) (in Basic Financial Instruments – 2)); and
  6. loan commitments measured at cost less impairment (Subsequent measurement (b) (in Basic Financial Instruments – 2)).

Disclose significance of financial instruments

An entity shall disclose information that enables users of its financial statements to evaluate the significance of financial instruments for its financial position and performance. For example, for long-term debt such information would normally include the terms and conditions of the debt instrument (such as interest rate, maturity, repayment schedule, and restrictions that the debt instrument imposes on the entity).

Disclose basis for determination of fair value

For all financial assets and financial liabilities measured at fair value, the entity shall disclose the basis for determining fair value, for example, quoted market price in an active market or a valuation technique. When a valuation technique is used, the entity shall disclose the assumptions applied in determining fair value for each class of financial assets or financial liabilities. For example, if applicable, an entity discloses information about the assumptions relating to prepayment rates, rates of estimated credit losses, and interest rates or discount rates.

Reliable measure of fair value no longer available

If a reliable measure of fair value is no longer available, or is not available without undue cost or effort when such an exemption is provided, for any financial instruments that would otherwise be required to be measured at fair value through profit or loss in accordance with this Standard, the entity shall disclose that fact, the carrying amount of those financial instruments and, if an undue cost or effort exemption has been used, the reasons why a reliable fair value measurement would involve undue cost or effort.

Derecognition

If an entity has transferred financial assets to another party in a transaction that does not qualify for derecognition (see Derecognition of a financial asset), the entity shall disclose the following for each class of such financial assets:

  1. the nature of the assets;
  2. the nature of the risks and rewards of ownership to which the entity remains exposed; and
  3. the carrying amounts of the assets and of any associated liabilities that the entity continues to recognise.

Collateral

When an entity has pledged financial assets as collateral for liabilities or contingent liabilities, it shall disclose the following:

  1. the carrying amount of the financial assets pledged as collateral; and
  2. the terms and conditions relating to its pledge.

Defaults and breaches on loans payable

For loans payable recognised at the reporting date for which there is a breach of terms or a default of principal, interest, sinking fund, or redemption terms that have not been remedied by the reporting date, an entity shall disclose the following:

  1. details of that breach or default;
  2. the carrying amount of the related loans payable at the reporting date; and
  3. whether the breach or default was remedied, or the terms of the loans payable were renegotiated, before the financial statements were authorised for issue.

Items of income, expense, gains or losses

An entity shall disclose the following items of income, expense, gains or losses:

  1. income, expense, gains or losses, including changes in fair value, recognised on:
    1. financial assets measured at fair value through profit or loss;
    2. financial liabilities measured at fair value through profit or loss;
    3. financial assets measured at amortised cost; and
    4. financial liabilities measured at amortised cost.
  2. total interest income and total interest expense (calculated using the effective interest method) for financial assets or financial liabilities that are not measured at fair value through profit or loss; and
  3. the amount of any impairment loss for each class of financial asset.

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