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Scope
The purpose of this Statement is to establish the accounting
standard for the disclosure and presentation of financial
instruments.
The
scope of this Statement includes contracts to buy or sell financial
items as well as contracts to buy or sell financial items which are
not entered into and held for the purpose of the receipt or delivery
of a non-financial item in accordance with the entity's expected
purchase, sale, or usage requirements.
Classification as Asset, Liability or Equity
A financial instrument is an equity instrument if, and only if, both
conditions (a) and (b) are met: (a) The instrument includes no
contractual obligation: (i) to deliver cash or another financial
asset to another entity; or (ii) to exchange financial assets or
financial liabilities with another entity under conditions that are
potentially unfavorable to the issuer. (b) If the instrument will or
maybe settled in the issuer’s own equity instruments, it is: (i) a
non-derivative that includes no contractual obligation for the
issuer to deliver a variable number of its own equity instruments;
or (ii) a derivative that will be settled by the issuer exchanging a
fixed amount of cash or another financial asset for a fixed number
of its own equity instruments.
Hybrid
financial
instruments are presented under component approach--
any asset and liability components of hybrid
financial instruments
are separated first and the residual is the amount of any equity
component.
Interest, Dividends, Losses and Gains
The classification of a financial instrument as a financial
liability or an equity instrument determines whether interest,
dividends, losses and gains relating to that instrument are
recognized as income or expense in profit or loss.
Disclosure
Required disclosures for financial instruments are:
Risk management policy disclosures
1.
Description of financial risk management objectives and policies,
including any hedging of forecasted transactions; and
2.
Specific quantitative disclosure relating to cash flow hedges gains
or losses recorded directly in equity.
Accounting policy disclosures
For each class of financial asset, financial liability and equity
instrument:
1. The accounting policies adopted; and
2.
Methods used to apply those policies.
Disclosure on terms and conditions
For each class of financial asset, financial liability and equity
instrument:
Nature and extent of instruments
1.
Significant terms and conditions that may affect amount, timing, and
certainty of future cash flows; and
2.
When the balance sheet presentation of a financial instrument
differs from its legal form, the nature of the instrument should be
explained.
Interest rate risk disclosures
For each class of instrument:
1.
Contractual repricing or maturity dates, whichever are earlier; and
2.
Effective interest rates, when applicable.
An indication of which instruments are:
1.
Exposed to fair value interest rate risk, e.g. fixed rate debt;
2.
Exposed to cash flow interest rate risk, e.g. floating rate debt;
and
3.
Not exposed to interest rate risk, e.g. equity securities.
Credit risk disclosures
For each class of financial assets, disclosures of credit risk
should include:
1.
Maximum credit risk exposure at the balance sheet date in the event
that other parties fail to perform their obligations, without taking
account of the fair value of any collateral; and
2.
Significant concentrations of credit risk.
Netting and right of set-off
1.
Existence of legal right of set-off; and
2.
Master netting agreements.
Credit risk from off-balance-sheet transactions;
1.
Letters of credit, guarantees, acceptances; and
2.
Credit derivative contracts.
Fair value disclosures
For each class of financial assets and liabilities, disclose fair
value that permits comparison with carrying amount and also:
1.
Methods and assumptions in determining fair value;
2.
Whether fair values are determined by reference to a published price
or estimated using a valuation technique;
3.
Whether any fair values are determined using valuation techniques
whose assumptions are not supported by observable market
prices;
4.
The total amount of change in fair value estimated using a valuation
technique that was recognised in profit and loss; and
5.
Exception for certain items measured at cost (e.g. unquoted equity
instruments) where fair value cannot be reliably measured: Disclose
this fact, along with Instrument description and explanation.
Other disclosure requirements
1.
Information on financial assets that have been sold or transferred
but do not qualify for derecognition;
2.
Significant items of income, expense, gains, and losses relating to
financial assets and liabilities;
3.
Reclassifications from fair value to cost;
4.
Information on compound financial instruments with multiple embedded
derivatives;
5.
Details of collateral pledged and received and significant terms and
conditions;
6.
Information relating to financial assets and liabilities at fair
value through the profit and loss;
7.
Impairment losses recognised in the P&L with disclosure including
the nature and amount for each class of financial assets; and
8.
Details on defaults or breaches of loans payable.
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 Effective
date
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This Statement becomes effective for financial statements for the
fiscal year ending on and after December 31, 2006. Earlier adoption
of component approach for hybrid instruments is not allowed. |
