IFRS PRACTICAL IMPLEMENTATION GUIDE AND WORKBOOK

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Chapter 39 / Finan cial In struments: Disclosures, (IFRS 7)

2.3 The scope of IFRS 7 is similar to that of lAS 32. Like lAS 32, IFRS 7 has scope exceptio ns for some items that meet the definition of a financial instrument. Such scope exceptions are listed in the table. Scope Excentioll Interests in subsidiaries Applicable Standard lAS 27, Consolidated and Separate Financial Statements

lAS 28, Investments in Associates lAS 3 1, lnterests in Joint Ventures lAS 19, Employee Benefits IFRS 2, Share-Based Payment IFRS 3, Business Combinations

Interests in associates Interests in join t ventures Employee benefit plans Share-ba sed payment transactions Contract s for contingent consideration in business combinations Insurance contracts

IFRS 4, lnsurance Contracts 2.4 In developing IFRS 7, IASB considered whether to make scope exceptions for insurers , small and medium-size entities, and the separate financia l statements of subsidiaries, but decided not to do so. 3. SIGNIFICANCE OF FINANCIAL INSTRUMENTS FOR FINANCIAL POSITION AND PERFORMANCE One of the two principal objectives of IFRS 7 is to require entities to disclose information that enables users of financial statements to evaluate the significance of financi al instrum ent s for the entities' financia l position and performance. To help achieve this objective, IFRS 7 requires disclos ure about balance sheet items, income statement and equity items, acco unting policies, hedge accou nting , and fair value. 3.1 Balance Sheet 3.1.1 Carrying Amounts IFRS 7 requires disclosure s about the carrying amount s of each of the categories of financial assets and financial liabilities defi ned in lAS 39. These disclosures are to be provided either on the face of the balance sheet or in the notes. The disclosure of carrying amounts by category help s users of financial statements understand the extent to which accounting policies for each category affect the amounts at which financial assets and financial liabilities are measured. Example The carrying amounts of each of these categories defined in lAS 39 are required to be disclosed: • Financial assets atfair value through profit or loss, showing separately (a) Those designated as such upon initial recognition , and (b) Those classified as held f or trading in accordance with lAS 39 • Held-to-maturity investments • Loans and receivables • Available-f ar-sale fi nancial assets • Financial liabilit ies at fa ir value through profit or loss, showing separately (a) Those designated as such upon initial recognition, and (b) Those classified as held for trading in accordance with lAS 39 • Financial liabilities measured at amo rtized cost 3.1.2 Items at Fair Value through Profit or Loss 3.1.2.1 Under lAS 39, entities are permitt ed to desig nate financial asse ts and financial liabilities at fair value through profit or loss if specified conditions are met. For some asse ts and liab ilities so designated, IFRS 7 requires special disclosures . These disclosure requirements apply to those loans and recei vables (i.e., where the entity is lending cash) and financial liabilities (i.e., where the entity is borrowing cash) that are designated as at fair value through profit or loss. 3.1.2.2 The required disclo sures include information about the amount of change in the fair value of the asse t or liability that is attributable to changes in the cred it risk of that asset or liability (i.e., the risk that the borrower will cause a financia l loss for the lender by failing to disc harge the obli-