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Wiley lFRS: Practical Implementation Guide and Workbook
4.1 Qualitative Disclosures
For each type of risk arising from financial instruments, IFRS 7 requires an entity to disclose
qual itati ve information about
• The exposures to risk and how they arise
• The entity's objectives, policies, and processes for managing the risk and its methods to
measure the risk
• Any change s from the previous period in the exposures or its objectives, policies, processes,
and methods
4.2 Quant itative Disclosures
4.2.0.1
For each type of risk arising from financial instruments, IFRS
7
requires an entity to dis–
close
• Summary quantitative data about its exposure to that risk at the reporting date
• Concentrations of risk
4.2.0.2
IFRS
7
requires the disclosure about an entity's exposure to risks to be based on how the
entity views and manages its risks (i.e., the information that it uses internally to assess risks).
4.2.0.3
If the quantitative data disclosed as of the reporting date are unrepresentative of an en–
tity 's exposure to risk during the period, an entity shall provide further information that is repre–
sentative.
4.2.1 Credit Risk
4.2.1.1
IFRS
7
defines "credit risk" as the risk that one party to a financial instrument will cause
a financi al loss for the other party by failing to discharge an obligation.
4.2.1.2
IFRS
7
requires these credit risk-related disclosures by class of financial instrument:
• The amount that best represents its maximum exposure to credit risk at the reporting date
without taking account of any collateral held or other credit enhancements (i.e., in many
cases, the carrying amount)
• A description of collateral held as security and other credit enhancements
• Information about the credit quality of financial assets that are neither past due nor impaired
• The carrying amount of financial assets that would otherwise be past due or impaired whose
terms have been renegotiated
4.2.1.3
To complement the above information, IFRS
7
also requires disclosure of
• An analysis of the age of financial assets that are past due as of the reporting date but not
impaired
• An analysis of financial assets that are individually determined to be impaired as of the
reporting date
• A description of collateral held by the entity as security and other credit enhancements
associated with past due or impaired assets
• The nature and carrying amount of financial or nonfinancial assets obtained during the period
by taking possession of collateral or through guarantees or other credit enhancements as well
as policies for disposing of or using such assets that are not readily convertible to cash
4.2.1.4
Credit risk informati on helps users of financial statements assess the credit qual ity of the
entity's financial assets and level and sources of impairment losses.
4.2.2 Liquidity Risk
4.2.2.1
IFRS
7
defines "liquidity risk" as the risk that an entity will encounter difficu lty in meet–
ing obligations associated with financial liabilities.
4.2.2.2
IFRS
7
requires an entity to disclose both
• A maturity analysis for financial liabilities that shows the remaining contractual maturitie s
• A description of how it manages the liquidity risk inherent in those liabilities