International GAAP® 2019: Generally Accepted Accounting Practice under International Financial Reporting Standards
Page 979
qualitative disclosures, Ch. 50, 5.1
qualifying criteria, Ch. 49, 6
quantitative disclosures, Ch. 50, 5.2, 5.6
credit risk dominance, Ch. 49, 6.4.2
capital disclosures, Ch. 50, 5.6.3
on the hedged item, Ch. 49, 6.4.2.B
concentrations of risk, Ch. 50, 5.6.1
on the hedging instrument, Ch. 49, 6.4.2.A
operational risk, Ch. 50, 5.6.2
designating ‘proxy hedges’, Ch. 49, 6.2.1
presentation on the face of the financial statements and related
documentation and designation, Ch. 49, 6.3
disclosures, Ch. 50, 7
business combinations, Ch. 49, 6.3.1
gains and losses recognised in other comprehensive
dynamic hedging strategies, Ch. 49, 6.3.2
income, Ch. 50, 7.2
forecast transactions, Ch. 49, 6.3.3
gains and losses recognised in profit/loss, Ch. 50, 7.1
economic relationship, Ch. 49, 6.4.1
embedded derivatives, Ch. 50, 7.1.4
general requirements, Ch. 49, 6.1
entities whose share capital is not equity, Ch. 50, 7.1.5
hedge effectiveness requirements, Ch.49, 6.4
further analysis of gains and losses recognised in
credit risk dominance, Ch.49, 6.4.2
profit/loss, Ch. 50, 7.1.2
economic relationship, Ch.49, 6.4.1
offsetting and hedges, Ch. 50, 7.1.3
hedge ratio, Ch.49, 6.4.3
presentation on the face of the statement of
proxy hedging, Ch.49, 6.2.1
comprehensive income (or income statement),
risk management strategy, Ch. 49, 6.2
Ch. 50, 7.1.1
risk management objective, Ch. 49, 6.2
statement of cash flows, Ch. 50, 7.5
setting the hedge ratio, Ch. 49, 6.4.3
statement of changes in equity, Ch. 50, 7.3
rebalancing, Ch. 49, 8.2
statement of financial position, Ch. 50, 7.4
definition, Ch. 49, 8.2.1
assets and liabilities, Ch. 50, 7.4.3
mechanics of, Ch. 49, 8.2.3
current and non-current assets and liabilities, distinction
requirement to rebalance, Ch. 49, 8.2.2
between, Ch. 50, 7.4.4
risk management, Ch. 49, 6.2, 6.3
convertible loans, Ch. 50, 7.4.4.B
proxy hedges, Ch. 49, 6.2.1
debt with refinancing or roll over agreements, Ch. 50,
risk management objective, Ch. 49, 6.2
7.4.4.D
change in, Ch. 49, 8.3
derivatives, Ch. 50, 7.4.4.A
risk management strategy, Ch. 49, 6.2
loan covenants, Ch. 50, 7.4.4.E
standards, development of, Ch. 49, 1.3
long-term loans with repayment on demand terms,
Financial instruments: presentation and disclosure, Ch. 50, 1–9
Ch. 50, 7.4.4.C
disclosures, structuring, Ch. 50, 3
disclosure requirements, Ch. 50, 7.4.2.C
classes of financial instrument, Ch. 50, 3.3
enforceable legal right of set-off, Ch. 50, 7.4.1.A
level of detail, Ch. 50, 3.1
entities whose share capital is not equity, Ch. 50, 7.4.6
materiality, Ch. 50, 3.2
equity, Ch. 50, 7.4.5
effective date and transitional provisions, Ch. 50, 8
intention to settle net, Ch. 50, 7.4.1.C
future developments, Ch. 50, 9
master netting agreements, Ch. 50, 7.4.1.B
interim reports, Ch. 50, 2.3
objective, Ch. 50, 7.4.2.A
nature and extent of risks arising from financial instruments,
offsetting collateral amounts, Ch. 50, 7.4.1.F
Ch. 50, 5
offsetting financial assets and financial liabilities, Ch. 50,
credit risk, Ch. 50, 5.3
7.4.1
collateral and other credit enhancements obtained,
offsetting financial assets and financial liabilities:
Ch. 50, 5.3.5
disclosure, Ch. 50, 7.4.2
credit risk exposure, Ch. 50, 5.3.4
scope, Ch. 50, 7.4.2.B
credit risk management practices, Ch. 50, 5.3.2
situations where offset is not normally appropriate, Ch. 50,
illustrative disclosures, Ch. 50, 5.3.6
7.4.1.D
quantitative and qualitative information about
unit of account, Ch. 50, 7.4.1.G
amounts arising from expected credit losses,
significance of financial instruments for an entity’s financial
Ch. 50, 5.3.3
position/performance, Ch. 50, 4
scope and objectives, Ch. 50, 5.3.1
accounting policies, Ch. 50, 4.1
liquidity risk, Ch. 50, 5.4
business combinations, Ch. 50, 4.6
information provided to key management, Ch. 50,
acquired receivables, Ch. 50, 4.6.1
5.4.1
contingent consideration and indemnification assets,
management of associated liquidity risk, Ch. 50, 5.4.3
Ch. 50, 4.6.2
maturity analyses, Ch. 50, 5.4.2
fair values, Ch. 50, 4.5
puttable financial instruments classified as equity,
day 1 profits, Ch. 50, 4.5.2
Ch. 50, 5.4.4
general disclosure requirements, Ch. 50, 4.5.1
136 Index
Financial instruments: presentation and disclosure —contd
recognition (IAS 39 and IFRS 9), Ch. 45, 2
significance of financial instruments for an entity’s financial
general requirements, Ch. 45, 2.1
position/performance —contd
firm commitments to purchase/sell goods/services,
hedge accounting, Ch. 50, 4.3
Ch. 45, 2.1.2
amount, timing and uncertainty of future cash flows,
forward contracts, Ch. 45, 2.1.3
Ch. 50, 4.3.2
option contracts, Ch. 45, 2.1.4
effects of hedge accounting on financial position and
planned future/forecast transactions, Ch. 45, 2.1.5
performance, Ch. 50, 4.3.3
receivables and payables, Ch. 45, 2.1.1
option to designate a credit exposure as measured at
‘regular way’ transactions, Ch. 45, 2.2
fair value through profit/loss, Ch. 50, 4.3.4
exchanges of non-cash financial assets, Ch. 45, 2.2.5.A
risk management strategy, Ch. 50, 4.3.1
settlement date accounting, Ch. 45, 2.2.4
income, expenses, gains and losses, Ch. 50, 4.2
trade date accounting, Ch. 45, 2.2.3
fee income and expense, Ch. 50, 4.2.3
Financial instruments: subsequent measurement
gains and losses by measurement category, Ch. 50,
amortised cost and the effective interest method, Ch. 46, 3
4.2.1
fixed interest rate instruments, Ch. 46, 3.2
interest income and expense, Ch. 50, 4.2.2
floating rate instruments, Ch. 46, 3.3
statement of financial position, Ch. 50, 4.4
inflation-linked debt, Ch. 46, 3.6
categories of financial assets and financial liabilities,
more complex financial liabilities, Ch. 46, 3.7
Ch. 50, 4.4.1
perpetual debt instruments, Ch. 46, 3.5
collateral, Ch. 50, 4.4.6
prepayment, call and similar options, Ch. 46, 3.4
compound financial instruments with multiple embedded
revisions to estimated cash flows, Ch. 46, 3.4.1
derivatives, Ch. 50, 4.4.7
foreign currencies, Ch. 46, 4
; defaults and breaches of loans payable, Ch. 50, 4.4.8
foreign entities, Ch. 46, 4.2
financial assets designated as measured at fair value
instruments, Ch. 46, 4.1
through profit/loss, Ch. 50, 4.4.3
and recognition of gains and losses, Ch. 46, 2
financial liabilities designated at fair value through
financial assets and financial liabilities at fair value through
profit/loss, Ch. 50, 4.4.2
profit/loss, Ch. 46, 2.4
interests in associates and joint ventures accounted for in
financial guarantees and commitments to provide a loan at
accordance with IAS 39/IFRS 9, Ch. 50, 4.4.9
a below-market interest rate, Ch. 46, 2.8
investments in equity instruments designated at fair value
reclassification of financial assets, Ch. 46, 2.7
through other comprehensive income (IFRS 9),
Financial liabilities and equity, Ch. 43, 1–12. See also Equity
Ch. 50, 4.4.4
instruments; Financial assets; IAS 32
reclassification, Ch. 50, 4.4.5
background, Ch. 43, 1.1
transfers of financial assets, Ch. 50, 6
classification, Ch. 44, 3
meaning of ‘transfer,’ Ch. 50, 6.1
classification of instruments
transferred financial assets that are derecognised in their
consolidated financial statements, Ch. 43, 4.8.1
entirety, Ch. 50, 6.3
contingent settlement provisions, Ch. 43, 4.3
disclosure requirements, Ch. 50, 6.3.2
contingencies that are ‘not genuine,’ Ch. 43, 4.3.1
meaning of continuing involvement, Ch. 50, 6.3.1
liabilities that arise only on a change of control, Ch.
transferred financial assets that are not derecognised in
43, 4.3.3
their entirety, Ch. 50, 6.2
liabilities that arise only on liquidation, Ch. 43, 4.3.2
transitional provisions, Ch. 50, 8
some typical contingent settlement provisions, Ch. 43,
Financial instruments: recognition and initial measurement,
4.3.4
Ch. 45, 1–3
contractual obligation to deliver cash or other financial
initial measurement (IAS 39 and IFRS 9), Ch. 45, 3
assets, Ch. 43, 4.2
assets and liabilities arising from loan commitments,
implied contractual obligation to deliver cash or other
Ch. 45, 3.7
financial assets, Ch. 43, 4.2.2
embedded derivatives and financial instrument hosts,
relationship between an entity and its members,
Ch. 45, 3.5
Ch. 43, 4.2.1
general requirements, Ch. 45, 3.1
definition of equity instrument, Ch. 43, 4.1
initial fair value and ‘day 1’ profits, Ch. 45, 3.3
examples of equity instruments
financial guarantee contracts and off-market loan
contracts to issue equity instruments, Ch. 43, 4.4.2
commitments, Ch. 45, 3.3.3
issued instruments, Ch. 43, 4.4.1
interest-free and low-interest long-term loans, Ch. 45,
IFRS development on, Ch. 43, 12
3.3.1
instruments redeemable
loans and receivables acquired in a business
with a ‘dividend blocker,’ Ch. 43, 4.5.3.A
combination, Ch. 45, 3.3.4
with a ‘dividend pusher,’ Ch. 43, 4.5.3.B
measurement of financial instruments following
mandatorily or at the holder’s option, Ch. 43, 4.5.1
modification of contractual terms, Ch. 45, 3.3.2
only at the issuer’s option or not redeemable, Ch. 43,
regular way transactions, Ch. 45, 3.6
4.5.2
transaction costs, Ch. 45, 3.4
Index
137
perpetual debt, Ch. 43, 4.7
temporary differences arising from split accounting,
preference shares and similar instruments, Ch. 43, 4.5
Ch. 43, 6.2.2
‘change of control,’ ‘taxation change’ and ‘regulatory
modification, Ch. 43, 6.3.4
change’ clauses, Ch. 43, 4.5.8
treatment by holder and issuer contrasted, Ch. 43, 6.1.1
economic compulsion, Ch. 43, 4.5.6
contracts accounted for as equity instruments, Ch. 43, 5.1
instruments redeemable mandatorily or at the holder’s
comparison with IFRS 2–share-based payment, Ch. 43,
option, Ch. 43, 4.5.1
5.1.1
‘linked’ instruments, Ch. 43, 4.5.7
exchange of fixed amounts of equity (equity for equity),
perpetual instruments with a ‘step-up’ clause, Ch. 43,
Ch. 43, 5.1.4
4.5.4
number of equity instruments issued adjusted for capital,
relative subordination, Ch. 43, 4.5.5
Ch. 43, 5.1.2
puttable instruments and instruments repayable only on
restructuring or other event, Ch. 43, 5.1.2
liquidation IFRIC 2, Ch. 43, 4.6.6
stepped up exercise price, Ch. 43, 5.1.3
instruments entitling the holder to a pro rata share of
contracts accounted for as financial assets or financial
net assets only on liquidation, Ch. 43, 4.6.3
liabilities, Ch. 43, 5.2
instruments issued by a subsidiary, Ch. 43, 4.6.4.A
derivative financial instruments with settlement options,
instruments that substantially fix or restrict the residual
Ch. 43, 5.2.8
return to the holder of an instrument, Ch. 43,
fixed amount of cash (or other financial assets)
4.6.4.E
denominated in a currency other than the entity’s
issue, Ch. 43, 4.6.1
functional currency, Ch. 43, 5.2.3
meaning of ‘identical features,’ Ch. 43, 4.6.4.C
fixed amount of cash determined by reference to share
no obligation to deliver cash or another financial asset,
price, Ch. 43, 5.2.6
Ch. 43, 4.6.4.D
fixed number of equity instruments for variable
puttable instruments, Ch. 43, 4.6.2
consideration, Ch. 43, 5.2.2
reclassification, Ch. 43, 4.6.5
fixed number of equity instruments with variable value,
relative subordination of the instrument, Ch. 43,
Ch. 43, 5.2.5
4.6.4.B
instrument with equity settlement alternative of
transactions entered into by an instrument holder
significantly higher value than cash settlement
other than as owner of the entity, Ch. 43, 4.6.4.F
alternative, Ch. 43, 5.2.4
reclassification of instruments
net-settled contracts over own equity, Ch. 43, 5.2.7
change of circumstances, Ch. 43, 4.9.2
variable number of equity instruments, Ch. 43, 5.2.1
change of terms, Ch. 43, 4.9.1
definitions, Ch. 41, 2.1; Ch. 43, 3; Ch. 48, 2
single entity financial statements, Ch. 43, 4.8.2
derecognition, Ch. 48, 6
compound financial instruments, Ch. 43, 6
derivatives that can be financial assets or financial
background, Ch. 43, 6.1
liabilities, Ch. 48, 6.4
common forms of convertible bonds, Ch. 43, 6.6
exchange or modification of debt by original lender,
bond convertible into fixed percentage of equity,
Ch. 48, 6.2
Ch. 43, 6.6.6
costs and fee
s, Ch. 48, 6.2.1
contingent convertible bond, Ch. 43, 6.6.2
examples, Ch. 48, 6.2.3
convertible bonds with down round or ratchet features,
modification gains and losses, Ch. 48, 6.2.2
Ch. 43, 6.6.7
settlement of financial liability with issue of new equity
convertibles with cash settlement at the option of the
instrument, Ch. 48, 6.2.4
issuer, Ch. 43, 6.6.5
extinguishment of debt, Ch. 48, 6.1
foreign currency convertible bond, Ch. 43, 6.6.4
extinguishment in exchange for transfer of assets not
functional currency bond convertible into a fixed
meeting the derecognition criteria, Ch. 48, 6.1.4
number of shares, Ch. 43, 6.6.1
‘in-substance defeasance’ arrangements, Ch. 48, 6.1.3
mandatorily convertible bond, Ch. 43, 6.6.3
legal release by creditor, Ch. 48, 6.1.2
components, Ch. 43, 6.4
what constitutes ‘part’ of a liability?, Ch. 48, 6.1.1
compound instruments with embedded derivatives,
gains and losses on extinguishment of debt, Ch. 48, 6.3
Ch. 43, 6.4.2
supply-chain finance, Ch. 48, 6.5
determining the components of a financial instrument,
derivatives over own equity instruments, Ch. 43, 11
Ch. 43, 6.4.1
call options, Ch. 43, 11.2
conversion
purchased call option, Ch. 43, 11.2.1
at maturity, Ch. 43, 6.3.1
written call option, Ch. 43, 11.2.2
before maturity, Ch. 43, 6.3.2
forward contracts, Ch. 43, 11.1
early redemption/repurchase, Ch. 43, 6.3.3
‘back-to-back’ forward contracts, Ch. 43, 11.1.3
exercising an embedded call option, Ch. 43, 6.3.3.B
forward purchase, Ch. 43, 11.1.1
through negotiation with bondholders, Ch. 43,
forward sale, Ch. 43, 11.2
6.3.3.A
put options, Ch. 43, 11.3
initial recognition–‘split accounting,’ Ch. 43, 6.2
purchased put option, Ch. 43, 11.3.1
accounting for the equity component, Ch. 43, 6.2.1
written put option, Ch. 43, 11.3.2
138 Index
Financial liabilities and equity —contd
liabilities, Ch. 2.7.3
designated at fair value through profit/loss, Ch. 50, 4.4.2
objective and scope, Ch. 2.6.1.1
dividends payable on shares classified as, Ch. 21, 5.5.4
perspective adopted in financial statements, Ch. 2.6.1.3
at fair value through profit or loss, Ch. 46, 2.4
reporting period and comparative information, Ch. 2.6.1.2
future developments, Ch. 43, 12
substance of contractual rights and contractual obligations,
gross-settled contracts for the sale or issue of the entity’s own