IFRS 7 Financial Instruments: Disclosures

IFRS 7AG Level of disclosure and classes of financial instruments

Appendix B Application guidance

This appendix is an integral part of the IFRS.

Classes of financial instruments and level of disclosure (paragraph 6)

B1 Paragraph 6 requires an entity to group financial instruments into classes that are appropriate to the nature of the information disclosed and that take into account the characteristics of those financial instruments. The classes described in paragraph 6 are determined by the entity and are, thus, distinct from the categories of financial instruments specified in IFRS 9 (which determine how financial instruments are measured and where changes in fair value are recognised).

B2 In determining classes of financial instrument, an entity shall, at a minimum:

distinguish instruments measured at amortised cost from those measured at fair value.
treat as a separate class or classes those financial instruments outside the scope of this IFRS.

B3 An entity decides, in the light of its circumstances, how much detail it provides to satisfy the requirements of this IFRS, how much emphasis it places on different aspects of the requirements and how it aggregates information to display the overall picture without combining information with different characteristics.

It is necessary to strike a balance between overburdening financial statements with excessive detail that may not assist users of financial statements and obscuring important information as a result of too much aggregation. For example, an entity shall not obscure important information by including it among a large amount of insignificant detail. Similarly, an entity shall not disclose information that is so aggregated that it obscures important differences between individual transactions or associated risks.

B4 [Deleted]

Other disclosure – accounting policies (paragraph 21)

B5 Paragraph 21 requires disclosure of 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 financial statements. For financial instruments, such disclosure may include:

(a)		for financial liabilities designated as at fair value through profit or loss:
	(i)	the nature of the financial liabilities the entity has designated as at fair value through profit or loss;
	(ii)	the criteria for so designating such financial liabilities on initial recognition; and
	(iii)	how the entity has satisfied the conditions in paragraph 4.2.2 of IFRS 9 for such designation.
(aa)		for financial assets designated as measured at fair value through profit or loss:
	(i)	the nature of the financial assets the entity has designated as measured at fair value through profit or loss; and
	(ii)	how the entity has satisfied the criteria in paragraph 4.1.5 of IFRS 9 for such designation.
(b)		[deleted]
(c)		whether regular way purchases and sales of financial assets are accounted for at trade date or at settlement date (see paragraph 3.1.2 of IFRS 9).
(d)		[deleted]
(e)		how net gains or net losses on each category of financial instrument are determined (see paragraph 20(a)), for example, whether the net gains or net losses on items at fair value through profit or loss include interest or dividend income.
(f)		[deleted]
(g)		[deleted]

Paragraph 122 of IAS 1 (as revised in 2007) also requires entities to disclose, along with its significant accounting policies or other notes, the judgements, apart from those involving estimations, that management has made in the process of applying the entity’s accounting policies and that have the most significant effect on the amounts recognised in the financial statements.

Previous: IFRS 7 Initial application of IFRS 9

Next: IFRS 7AG Nature and risk from financial instruments

Source EU rules on financial information disclosed by companies



Last Updated on 07/02/2020 by 75385885
Excerpts from IFRS Standards come from the Official Journal of the European Union (© European Union, https://eur-lex.europa.eu). Individual jurisdictions around the world may require or permit the use of (locally authorised and/or amended) IFRS Standards for all or some publicly listed companies.  The information provided on this website is for general information and educational purposes only and should not be used as a substitute for professional advice. The specific status of IFRS Standards should be checked in each individual jurisdiction. Use at your own risk. Annualreporting is an independent website and it is not affiliated with, endorsed by, or in any other way associated with the IFRS Foundation. For official information concerning IFRS Standards, visit IFRS.org or the local representative in your jurisdiction.

IFRS 7AG Level of disclosure and classes of financial instruments IFRS 7AG Level of disclosure and classes of financial instruments IFRS 7AG Level of disclosure and classes of financial instruments IFRS 7AG Level of disclosure and classes of financial instruments IFRS 7AG Level of disclosure and classes of financial instruments IFRS 7AG Level of disclosure and classes of financial instrumentsIFRS 7AG Level of disclosure and classes of financial instruments IFRS 7AG Level of disclosure and classes of financial instruments IFRS 7AG Level of disclosure and classes of financial instruments IFRS 7AG Level of disclosure and classes of financial instruments