IND AS 107

Financial
Instruments:
Disclosures
Pournima Mulay, KSBC 221,
SYBCOM, Division B, Semester 4 ,
Email ID: [email protected]
Phone No. 9867393806
 The objective of the Ind AS 107 is to
require entities to provide disclosures in
their financial statements that enable
users to evaluate:
• the significance of financial
instruments for the entity’s financial
Objective position and performance; and
• the nature and extent of risks arising
from financial instruments to which
the entity is exposed during the period
and at the end of the reporting period,
and how the entity manages those
 Scope
This Ind AS shall be applied by all entities to all types of financial instruments, except
• Those interests in subsidiaries, associates or Joint Ventures
• Employers’ rights and obligations arising from employee benefit plans.
• Insurance contracts.
• Financial instruments, contracts and obligations under share-based payment transactions.
• Instruments that are required to be classified as equity instruments.
• Leasing commitments
• Financial instruments resulting in business combination
Application:
Applies to Recognized and Unrecognized financial instruments
• Recognized = Financial instruments that are within the scope of Ind AS 109
• Unrecognized = Financial instruments outside the scope of Ind AS 109, but within the scope of this Ind AS.
Overview
1. Balance
Sheet
 The carrying amounts of each of the following categories, shall be
disclosed either in the balance sheet or in the notes:
A. Financial assets at fair value through profit or loss, showing
1.1 separately
i. Those designated as such upon initial recognition
Categories of ii. Those classified as held for trading in accordance with Ind
AS 39;
financial B. Held-to-maturity investments;

assets and C. Loans and receivables;

D. Available-for-sale financial assets;

financial E. Financial liabilities at fair value through profit or loss, showing

separately

liabilities iii.
iv.
Those designated as such upon initial recognition
Those classified as held for trading in accordance with Ind
AS 39
F. Financial liabilities measured at amortized cost.
1.2 Financial assets or financial liabilities at fair value
through profit or loss

If the entity has designated a loan or receivable as at fair value through profit or loss, it shall disclose:
A. The maximum exposure to credit risk of the loan or receivable at the end of the reporting period.
B. The amount by which any related credit derivatives or similar instruments mitigate that maximum exposure
to credit risk.
C. The amount of change, during the period and cumulatively, in the fair value of the loan or receivable that is
attributable to changes in the credit risk of the financial asset determined either:
i. As the amount of change in its fair value that is not attributable to changes in market conditions that give rise
to market risk ; or
ii. Using an alternative method the entity believes more faithfully represents the amount of change in its fair
value that is attributable to changes in the credit risk of the asset.
D. The amount of the change in the fair value of any related credit derivatives or similar instruments that has
occurred during the period and cumulatively since the loan or receivable was designated.
If the entity has designated a financial liability as at fair value through profit or loss in
accordance with Ind AS 109 and is required to present the effect of changes in that
liability’s credit risk in other comprehensive income, it should disclose:
a. the amount of change, cumulatively in the fair value of the financial liability that
is attributable to changes in the credit risk of that liability
b. the difference between the financial liability’s carrying amount and the amount the
entity would be contractually required to pay at maturity to the holder of the
obligation
c. Any transfers of the cumulative gain/ loss within equity during the period
including the reason for such transfers
d. If a liability is derecognized during the period, the amount presented in other
comprehensive income that was realized at derecognition
If the entity has designated a financial liability as at fair value through profit or loss in
accordance with Ind AS 109 and is required to present all changes in the fair value of
that liability in profit or loss, it shall disclose:
e. the amount of change, during the period and cumulatively, in the fair value of the
financial liability that is attributable to changes in the credit risk of that liability
f. difference between the financial liability’s carrying amount and the amount the
entity would be contractually required to pay at maturity to the holder of the
obligation
 If an entity has designated investments in equity instruments to
be measured at fair value through other comprehensive income
in accordance with Ind AS 109, it shall disclose:
a. Investments in equity instruments designated to be
1.3 Investments in measured at fair value

equity instruments b. Reasons for using this presentation alternative

c. Dividends recognised during the period
designated at fair d. Any transfers of the cumulative gain/ loss within equity
value through other during the period including the reason for such transfers

comprehensive If an entity derecognized investments in equity instruments

measured at fair value through other comprehensive income
income during the reporting period, it shall disclose:
e. Reasons for disposing thee investments
f. Fair value of assets at date of recognition
g. Cumulative gain/ loss on disposal
 1.4 Reclassification
If the entity has reclassified a financial asset
a. at cost or amortized cost, rather than at fair value; or
b. at fair value, rather than at cost or amortized cost,
It shall disclose the amount reclassified into and out of each category and the reason for that reclassification.
for each reporting period following the reclassification an entity shall disclose for assets reclassified out of the fair value
through profit or loss category so that they are measured at amortized cost/ fair value through other comprehensive income in
accordance with Ind AS 109:
c. the effective interest rate on the date of reclassification
d. The interest revenue recognised
If since its last annual reporting date, an entity has reclassified out of the fair value through other comprehensive income so
that they are measured at amortized cost/ fair value through profit or loss category so that they are measured at amortized cost/
fair value through other comprehensive income it shall disclose:
e. The fair value of the financial assets at the end of the reporting period
f. Fair value gain/ loss that would have been recognized
1.5 Derecognition 1.6 Collateral
An entity may have transferred financial assets in An entity shall disclose:
such a way that part or all of the financial assets do
(a) The carrying amount of financial assets it has
not qualify for derecognition. The entity shall
pledged as collateral for liabilities or contingent
disclose for each class of such financial assets:
liabilities, including amounts that have been
a. The nature of the assets; reclassified in accordance with paragraph 37(a)
of Ind AS 39; and
b. The nature of the risks and rewards of
ownership to which the entity remains exposed; (b) The terms and conditions relating to its pledge.
c. When the entity continues to recognize all of When an entity holds collateral (of financial or non-
the assets, the carrying amounts of the assets financial assets) and is permitted to sell or repledge
and of the associated liabilities; and the collateral in the absence of default by the owner of
the collateral, it shall disclose:
d. When the entity continues to recognize the
assets to the extent of its continuing (c) The fair value of the collateral held;
involvement, the total carrying amount of the
(d) The fair value of any such collateral sold or
original assets, the amount of the assets that the
repledged, and whether the entity has an
entity continues to recognize, and the carrying
obligation to return it; and
amount of the associated liabilities.
(e) The terms and conditions associated with its use
of the collateral.
1.7 Allowance for credit 1.9 Defaults and
losses Breaches
When financial assets are impaired by credit losses and For loans payable recognized at the end of the reporting
the entity records the impairment in a separate account period, an entity shall disclose:
rather than directly reducing the carrying amount of the
asset, it shall disclose a reconciliation of changes in that (a) details of any defaults during the period of
account during the period for each class of financial principal, interest, sinking fund, or redemption
assets. terms of those loans payable;
(b) the carrying amount of the loans payable in default
at the end of the reporting period; and
1.8 Compound financial (c) whether the default was remedied, or the terms of
the loans payable were renegotiated, before the
instruments with multiple financial statements were approved for issue.

embedded derivatives If, during the period, there were breaches of loan
agreement terms other than those described in paragraph
18, an entity shall disclose the same information as
If an entity has issued an instrument that contains both a
required by paragraph 18 if those breaches permitted the
liability and an equity component and the instrument has
lender to demand accelerated repayment.
multiple embedded derivatives whose values are
interdependent, it shall disclose the existence of those
features.
2. Statement of
Profit and Loss
An entity shall disclose the following items of income, expense, gains or losses either in the statement of profit and loss or in
the notes:
• Net gains or net losses on:
a. Financial assets or financial liabilities at fair value through profit or loss, showing separately those on financial assets
or financial liabilities designated as such upon initial recognition, and those on financial assets or financial liabilities
that are classified as held for trading in accordance with Ind AS 39;
b. Available-for-sale financial assets, showing separately the amount of gain or loss recognized in other comprehensive
income during the period and the amount reclassified from equity to profit or loss for the period;
c. Held-to-maturity investments;
d. Loans and receivables;
e. Financial liabilities measured at amortized cost;
• Total interest income and total interest expense for financial assets or financial liabilities that are not at fair value through
profit or loss;
• Fee income and expense arising from:
a. Financial assets or financial liabilities that are not at fair value through profit or loss; and
b. Trust and other fiduciary activities that result in the holding or investing of assets on behalf of individuals, trusts,
retirement benefit plans, and other institutions;
• Interest income on impaired financial assets accrued in accordance with paragraph AG93 of Ind AS 39;
• The amount of any impairment loss for each class of financial asset.
 3. Other
Disclosures
3.1 Accounting
policies 3.2 Hedge Accounting
An entity shall apply these disclosure
An entity discloses, in the summary of requirements for those risk exposures that an
significant accounting policies, the measurement entity hedges and for which it elects to apply
basis (or bases) used in preparing the financial hedge accounting. These disclosures shall
statements and the other accounting policies provide information about:
used that are relevant to an understanding of the
financial statements. a. Entity’s risk managements strategy
b. How entity's hedging activities may affect
the amount, timing and uncertainty of
future cash flows
c. Effect of entity's balance sheet, statement
of comprehensive income and statement of
changes in equity
 • For each class of financial assets and
financial liabilities, an entity shall disclose
the fair value of that class of assets and
liabilities in a way that permits it to be
compared with its carrying amount.
• Offset fair values only to the extent that their
3.3 Fair value carrying amounts are offset in the balance
sheet.
• Disclosures of fair value are not required
when the carrying amount is a reasonable
approximation of fair value, for example for
financial instruments such as short-term trade
receivables and payables
4. Nature and Extent of
Risks Arising from
Financial Instruments
An entity shall disclose information that enables users of its financial statements to evaluate the nature and
extent of risks arising from financial instruments to which the entity is exposed at the end of the reporting
period.
Qualitative disclosures: For each type of risk arising from financial instruments, an entity shall disclose:
a. The exposures to risk and how they arise;
b. Its objectives, policies and processes for managing the risk and the methods used to measure the risk;
c. Any changes in (a) or (b) from the previous period.
Quantitative disclosures: For each type of risk arising from financial instruments, an entity shall disclose:
d. Summary quantitative data about its exposure to that risk at the end of the reporting period. This
disclosure shall be based on the information provided internally to key management personnel of the
entity.
e. The disclosures required by paragraphs 36–42, to the extent not provided in accordance with (a).
f. Concentrations of risk if not apparent from the disclosures made in accordance with (a) and (b).
If the quantitative data disclosed as at the end of the reporting period are unrepresentative of an entity’s
exposure to risk during the period, an entity shall provide further information that is representative.
4.1 Credit risk 4.2 Market risk
• Information about an entity’s credit risk management
practices:
a. How to determine the increase in the credit risk of a. Sensitivity analysis for each type of market risk, For
Financial instrument e.g. Value at risk analysis
b. Definition of default b. methods and assumptions in preparing the sensitivity
analysis
c. Grouping of instruments for assessing expected credit
losses. c. Any changes from the previous period in methods and
assumptions used.
d. Write-off policy
• Quantitative and qualitative information about the
amounts in the financial statements arising from expected
credit losses
• Information about an entity’s credit risk exposure
including significant credit risk concentrations ,that
includes:
a. The maximum exposure to credit risk
b. A description of collateral held
c. Information about credit quality of financial assets
 The entity should disclose: (Undiscounted Cash flow)
• A maturity analysis for Non derivative financial liabilities
(including Financial Guarantee contracts)that shows the
remaining contractual maturities,
• A maturity analysis for derivative financial liabilities that shows
the remaining contractual maturities

4.3 Liquidity • A description of how it manages the liquidity risk inherent in (a)
& (b) above, which may include following:

risk
a. Committed borrowing facilities
b. Deposits at central banks to meet liquidity needs;
c. Internal control processes and contingency plans for
managing liquidity risk;
d. Has terms that can call for collateral (eg margin calls for
derivatives);
e. Power to choose settlement (cash or another financial asset or
by delivering its own shares;
f. Has instruments that are subject to master netting agreements
 Acknowledgement
I would like to express my thanks to my Financial Accounts Professor Pratik Sir for their guidance
and support in helping me complete this project
I would also like to thank our principal of K.C. College Dr. Hemlata Bagla for providing us with the
required facility
Lastly I would like to thank my batchmates for cooperating with me and helping in providing the
required information

Thank You!
Thank You!