IFRS 7 Financial Instruments: Disclosures

International Financial Reporting Standard 7

Issued: in 2005; followed by amendments
Effective date: 1 January 2007
What it does:
- It prescribes disclosures an entity shall provide about financial instruments in its financial statements.
- It requires the two main categories of disclosures:
  1. Disclosures about significance of financial instruments for financial position and performance, such as:
    - Information by categories of financial assets and liabilities;
    - Specific disclosures about financial assets or financial liabilities at fair value through profit or loss and financial assets valued at fair value through other comprehensive income;
    - Reclassification of financial instruments among categories;
    - Derecognition;
    - Collaterals;
    - Allowances for credit losses;
    - Compound financial instruments with multiple embedded derivatives;
    - Defaults and breaches of loan agreement terms,
    - Accounting policies applied, etc.
  2. Disclosures about nature and extent of risks arising from financial instruments, both quantitative and qualitative, about the following types of risks:
    1. Credit risk;
    2. Liquidity risk;
    3. Market risk.
- It requires disclosures about transfers of financial assets.
- It contains the application guidance.

For more articles about financial instruments, please see the overview of IFRS 9 Financial Instruments.

For questions and answers related to financial instruments, please refer to Overview of IFRS 9.

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