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Pfrs 7 Financial Instruments Disclosures

PFRS 7 prescribes disclosure requirements for financial instruments. It requires entities to disclose information about the significance of financial instruments for the entity's financial position and performance. This includes disclosing the carrying amounts of financial assets and liabilities by category. It also requires disclosures about an entity's exposures to risks from financial instruments like credit risk, liquidity risk, and market risk and how the entity manages those risks. The disclosures are both qualitative, describing the risks and how they are managed, and quantitative, including summary data about risk exposures.

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236 views3 pages

Pfrs 7 Financial Instruments Disclosures

PFRS 7 prescribes disclosure requirements for financial instruments. It requires entities to disclose information about the significance of financial instruments for the entity's financial position and performance. This includes disclosing the carrying amounts of financial assets and liabilities by category. It also requires disclosures about an entity's exposures to risks from financial instruments like credit risk, liquidity risk, and market risk and how the entity manages those risks. The disclosures are both qualitative, describing the risks and how they are managed, and quantitative, including summary data about risk exposures.

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R.A.
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PFRS 7 FINANCIAL INSTRUMENTS: DISCLOSURES

I. NATURE
PFRS 7 prescribes the disclosure requirements for financial instruments.
PFRS 7 complements the presentation principles in PAS 32 Financial Instruments:
Presentation and the recognition and measurement principles in PFRS 9 Financial
Instruments.
PFRS 7 applies to financial instruments that are within the scope of PFRS 9.
PFRS 7 does not apply to financial instruments that are dealt with under other
standards, such as interests in subsidiaries (PFRS 10 Consolidated Financial
Statements), associates and joint ventures (PAS 28), those arising from employee
benefit plan (PAS 19) and share-based payment transactions (PFRS 2), and those that
are required to be classified as equity instruments.

II. RECOGNITION
The disclosures are broadly classified into the ff. two main categories:
a. Significance of financial instruments to the entity’s financial position and
performance; and
b. The nature and extent of risks arising from financial instruments to which the
entity is exposed, and how the entity manages those risks.

III. DISCLOSURE
A. Significance of financial instruments

 Statement of financial position


i. Carrying amount of financial assets and financial liabilities
 Entity is required to disclose the carrying amount of each of
the following categories of financial instruments under PFRS
9.
ii. Financial assets and financial liabilities measured at FVPL
 (Financial Assets) disclose the financial asset’s exposure
to credit risk and the change in fair value attributable to
changes in credit risk.
 (Financial Liability) disclose the change in fair value that is
attributable to changes in credit risk, the difference between
the carrying amount and maturity value, and, if the entity is
required to present the effects of changes in the liability’s
credit risk in OCI.
iii. Financial assets measured at FVOCI
 Disclose those investments, the reason for the election, any
dividends recognized during the period, and any transfers of
cumulative gain or loss within equity.
 If any those investments were disposed of, the entity shall
disclose the reason for the disposal, the fair value on
derecognition date, and the cumulative gain or loss on
disposal.
iv. Reclassification of financial assets
 Disclose the date of reclassification, an explanation of the
change in business model, and the amount reclassified
between categories.
 Reclassification from FVOCI/FVPL to Amortized cost or from
FVPL to FVOCI/Amortized cost, disclose the fair value
gain/loss.
v. Offsetting financial assets and financial liabilities
 Disclose the gross amount of those assets and liabilities, the
amounts that were set-off, the net amount presented in the
statement of financial position and a description of the related
legal right of set-off.
vi. Collateral
 Disclose the carrying amounts of financial assets pledge as
collateral for liabilities, including the terms and conditions of
the pledge.
 If the entity holds permitted to sell collateral, disclose the fair
value of such collateral.

vii. Allowance account for credit losses


 Loss allowance is disclosed in the notes.
viii. Defaults and breaches
 Disclose any defaults and breaches relating to loans
payable, including the carrying amount of those loans
payable, the principal, interest, sinking fund, or redemption
terms.

 Statement of comprehensive income


i. Net gains or net losses on:
1. Financial liabilities and financial assets measured at FVPL
2. Financial assets measured at amortized cos
3. Financial liabilities measured at amortized cost
4. Financial assets measured at FVOCI

ii. Total interest revenue and total interest expense


iii. Fee income and expense

 Other disclosure
i. Fair value

B. Nature and extent of risks arising from financial instruments

 Credit risk
 Liquidity risk
 Market risk
i. Currency risk
ii. Interest rate risk
iii. Other price risk
Qualitative disclosures (of the risks) Quantitative disclosures (of the risks)
a. Risk exposures and hoe they arise a. Summary of quantitative data
b. Entity’s risk management about the entity’s risk exposure at
objectives, policies and processes, the end of the reporting period
including methods used to b. Concentrations of risk
measure risk c. Other relevant disclosures not
c. Any changes in (a) or (b) from the provided in (a) and (b)
previous period

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