IFRS PRACTICAL IMPLEMENTATION GUIDE AND WORKBOOK

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Wiley IFRS: Practical Implementation Guide and Workbook

3.2 Income Statement and Equity Items IFRS 7 requires an entity to disclose certai n specified items of income, expense, gains, or losses, either on the face of the financial statements or in the notes. These disclosures help users assess the performance of an entity's financial instruments and activities. The required disclosures include • Income statement net gains or net losses for each of the categories of financial assets and financi al liabiliti es in lAS 39 • Tot al interest income and total interest expense (calculated using the effective interest method) for financ ial asse ts or financi al liabilities that are not at fair value through profit or loss • Fee income and expense (other than amounts included in determining the effective interest rate) arising from financial assets or financial liabil ities that are not at fair value through profit or loss; and 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 • Interest income on impaired financial assets accrued in accordance with lAS 39 • The amount of any impairment loss for each class of financial asset ExampLe The required disclosures of income statement gains and losses include amounts fo r • Financial assets or fi nancial liabilities at fair value through profi t or loss. showing sepa– rately those on fi nancial assets or fi nancial liabilities designated as such upon initial recog– nition. and those on fin ancial assets or finan cial liabilities that are classified as held for trading in accordance with LAS 39 • Available-for-sale fi nancial assets. showing separat ely the amount of gain or Loss recognized directLy in equity during the period and the amount removed from equity and recognized in profit or loss f o r the period • Held-to-maturity investments • Loans and receivables • Financial liabiLities measured at amortized cost IFRS 7 includes a referenc e to lAS I, which requires an entity to disclose, 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 financi al statements. 3.3.2 Hedge Accounting 3.3.2.1 Because hedge acco unting is elective and subject to restrictive conditions under lAS 39, it is important that entities provide information about the extent to which they have applied hedge accounting and its effects on the financial statements in order to enable users to compare financial statements of different entit ies. IFRS 7 contains detailed disclosure requirements in this respect. An entity shall disclose separately for designated fair value hedges, cash flow hedges, and hedges of a net investment in a foreign operation • A description of each type of hedge • A description of the financial instruments designated as hedging instrument s and their fair values at the reporting date • The nature of the risks being hedged 3.3.2.2 For cash flow hedges, an entity shall also disclose the periods in which the cash flows are expected to occur, when they are expected to enter into the determination of profit or loss, and a description of any forecast transaction for which hedge accounting had previously been used but which is no longer expected to occur. 3.3.2.3 When a gain or loss on a hedging instrument in a cash flow hedge has been recognized directl y in equity, through the statement of changes in equity, an entity shall disclose • The amount that was so recognized in equity during the period • The amount that was removed from equity and included in profit or loss for the period 3.3 Other Disclosures 3.3.1 Accounting Policies