Disclosure financial instruments

IFRS 7 requires certain disclosures to be presented by category of instrument based on the IAS 39 measurement categories. Certain other disclosures are required by class of financial instrument.

For those disclosures an entity must group its financial instruments into classes of similar instruments as appropriate to the nature of the information presented. [IFRS 7 6]

The two main categories of disclosures required by IFRS 7 are:

  1. information about the significance of financial instruments [IFRS 7 7 – 30]
  2. information about the nature and extent of risks arising from financial instruments [IFRS 7 31 – 42]

So IFRS 7 bets on two disclosure options for these two main categories of disclosures:

  • specific disclosure requirements by a defined set of categories of financial instrument [IFRS 9 4.1 – 4.4], and
  • specific disclosure requirements by appropriate classes of financial instruments, grouped based on the nature of the presented information [IFRS 7 B1 – B5].


Financial instruments are complex, come in a great variety of contracts, risks and products, just to name a few.

The defined set of (measurement) categories of financial instruments is included in IAS 39 9:

Classes are potentially determined at a lower level than the measurement categories and need to be reconciled back to the balance sheet. [IFRS 7 6]

The level of detail for classes of financial instruments should be determined on an entity specific basis and may be defined for each individual disclosure in a different way. In determining the specific classes of financial instruments, an entity should, at a minimum:

  • distinguish financial instruments at amortised csost from financial assets at fair value,
  • classify financial contracts outside the scope of IFRS 7 as a separate class or classes to which the disclosure requirements of IFRS 7 do not apply to this class or classes. Off course guidance can be obtained from IFRS 7 and other IFRSs in such a case. [IFRS 7 B2]

In addition IFRS 7 requires certain disclosures to be provided by class of financial instrument, including the following:

  • the financial assets not qualifying for derecognition,
  • the reconciliation of an allowance account,
  • the amount of impairment loss for financial assets,
  • fair values,
  • specific disclosures relating to credit risks.

Loans and receivables

For example, a bank’s category ‘loans and receivables’ may comprise more than one type (or class) of loans and receivables, unless the loans and receivables have similar characteristics. So unless the loans and receivables have similar characteristics, a bank can classify loans and receivables as follows:

  • by type of customer – commercial loans (loans to businesses), loans to individuals and/or loans to families, or
  • by type of loans (product) – mortgages, credit card debt, unsecured loans and/or bank overdrafts.

‘Available-for-sale financial assets’

Similar to loans and receivables, ‘available-for-sale financial assets’ may be classified into bond investments and equity investments. The equity investments may be further detailed into listed and unlisted equity investments, similar to the situation that listed loans to enterprises are bonds and separated from commercial loans (see above loans and receivables).

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