CFM16060 - Accounting for financial instruments: IAS 32 and IAS 39: subjects covered by IAS 32
What IAS 32 covers
The principal categories of disclosure requirements in IAS 32 (as issued in December 2003) relating to financial instruments are:
- risk management policies and hedging activities; details of hedges;
- terms, conditions and accounting policies – assumptions and methods applied;
- the entity's exposure to interest rate risk from financial assets and financial liabilities;
- the entity's exposure to credit risk, and
- the fair value of financial assets and financial liabilities.
In August 2005 the IASB issued a new standard,IFRS 7 to deal
separately from IAS 32 with required disclosures relating to
financial instruments. IFRS 7 is effective from 1 January 2007. The
relevant paragraphs in IAS 32 are withdrawn. Disclosure
requirements are discussed briefly at
CFM16330.
IAS 32 also deals with the following
presentation issues:
- the equity/liability split ( CFM16155 onwards) with particular reference to:
- the classification of financial instruments that are in substance liabilities,
- 'split accounting' for compound financial instruments;
- the classification of derivatives in own shares; and
- treasury shares (a company's own shares that it has reacquired).
- offsetting in the balance sheet of receivables and payables ( CFM16335).
