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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
3.3 Other Disclosures
3.3.1 Accounting Policies
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