461 / 488
Chapter
39 /
Finan cial In struments: Disclosures, (IFRS 7)
449
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
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
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
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-