IAS 32 Objective Scope Definitions

Last Updated on 12/02/2020 by 75385885

IAS 32 Financial Instruments: PresentationIAS 32 Objective Scope Definitions

IAS 32 Objective Scope Definitions

Objective

1 [Deleted]

2 The objective of this Standard is to establish principles for presenting financial instruments as liabilities or equity and for offsetting financial assets and financial liabilities. It applies to the , from the perspective of the issuer, into financial assets, financial liabilities and equity instruments; the classification of related interest, dividends, losses and gains; and the circumstances in which financial assets and financial liabilities should be offset.

3 The principles in this Standard … Read more

IAS 32 Presentation

Last Updated on 05/03/2020 by 75385885

IAS 32 Financial Instruments: PresentationIAS 32 Presentation

IAS 32 Presentation

Liabilities and equity

See also: AG13-AG14J  |   AG25-AG29A

15 The issuer of a financial instrument shall classify the instrument, or its component parts, on initial recognition as a financial liability, a financial asset or an equity instrument in accordance with the substance of the contractual arrangement and the definitions of a financial liability, a financial asset and an equity instrument.

16 When an issuer applies the definitions in paragraph 11 to determine whether a financial instrument is an equity instrument rather than a financial liability, the instrument is an equity instrument if, and only if, both conditions (a) and (b) below are met.

  1. The instrument
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IAS 32 AG Definitions

Last Updated on 05/03/2020 by 75385885

IAS 32 Financial Instruments: PresentationIAS 32 AG Definitions

IAS 32 AG Definitions

Appendix Application Guidance IAS 32 Financial Instruments: Presentation

This appendix is an integral part of the Standard.

AG1 this Application Guidance explains the application of particular aspects of the Standard.

AG2 The Standard does not deal with the recognition or measurement of financial instruments. Requirements about the recognition and measurement of financial assets and financial liabilities are set out in IFRS 9.

Definitions (paragraphs 11–14)


Financial assets and financial liabilities

AG3 Currency (cash) is a financial asset because it represents the medium of exchange and is therefore the basis on which all transactions are measured and recognised in financial statements. A deposit of cash with … Read more

IAS 32 AG Presentation

Last Updated on 05/03/2020 by 75385885

IAS 32 Financial Instruments: PresentationIAS 32 AG Presentation

IAS 32 AG Presentation

Appendix Application Guidance IAS 32 Financial instruments: Presentation

Presentation

Liabilities and equity (paragraphs 15–27)


No contractual obligation to deliver cash or another financial asset (paragraphs 17–20)

AG25 Preference shares may be issued with various rights. In determining whether a preference share is a financial liability or an equity instrument, an issuer assesses the particular rights attaching to the share to determine whether it exhibits the fundamental characteristic of a financial liability. For example, a preference share that provides for redemption on a specific date or at the option of the holder contains a financial liability because the issuer has an obligation to transfer financial assets … Read more

IFRS 32 IE1 Introduction Illustrative examples

Last Updated on 12/02/2020 by 75385885

IAS 32 Financial Instruments: PresentationIFRS 32 IE1 Introduction Illustrative examples

IE1 Introduction Illustrative examples

These examples accompany, but are not part of, IFRS 32 Financial Instruments: Presentation

Accounting for contracts on equity instruments of an entity


IE1 The following examples illustrate the application of paragraphs 1527 and IFRS 9 to the accounting for contracts on an entity’s own equity instruments (other than the financial instruments specified in paragraphs 16A and 16B or paragraphs 16C and 16D).

Example 1 Forward to buy shares

IE2 This example illustrates the journal entries for forward purchase contracts on an entity’s own shares that will be settled

  1. net in cash,
  2. net in shares, or
  3. by delivering cash in exchange for shares.

It also … Read more

IE33-Example 8 Entities with some equity

Last Updated on 12/02/2020 by 75385885

IAS 32 Financial Instruments: PresentationIE33-Example 8 Entities with some equity

IE33-Example 8 Entities with some equity

The following example illustrates a format of a statement of comprehensive income and statement of financial position that may be used by entities whose share capital is not equity as defined in IAS 32 because the entity has an obligation to repay the share capital on demand but does not have all the features or meet the conditions in paragraphs 16A and 16B or paragraphs 16C and 16D. Other formats are possible.

Statement of comprehensive income for the year ended 31 December 20X1

  20×1   20×0
  CU   CU
       
Revenue 472   498
Expenses (classified by
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IE37-38-Example 10 A compound part derivative instrument

Last Updated on 12/02/2020 by 75385885

IAS 32 Financial Instruments: PresentationIE37-38-Example 10 A compound part derivative instrument

IE37-38-Example 10 A compound part derivative instrument

Accounting for compound financial instruments

Separation of a compound financial instrument with multiple embedded derivative features

IE37 The following example illustrates the application of paragraph 31 to the separation of the liability and equity components of a compound financial instrument with multiple embedded derivative features.

IE38 Assume that the proceeds received on the issue of a callable convertible bond are CU60. The value of a similar bond without a call or equity conversion option is CU57. Based on an option pricing model, it is determined that the value to the entity of the embedded call feature in a similar bond without an … Read more