IFRS 7 Financial Instruments: Disclosures

International Financial Reporting Standard 7

Overview of IFRS 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.

Articles about IFRS 7

Questions and Answers

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

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