21 Financial Instruments Version2011 01
-
Upload
rizwanghulamhussain -
Category
Documents
-
view
217 -
download
0
Transcript of 21 Financial Instruments Version2011 01
-
8/10/2019 21 Financial Instruments Version2011 01
1/71
2011 IFRS Foundation
1The IFRS for SMEs
Topic 2.1
Section 11 Basic Financial Instruments
Section 12 Other Fin. Inst. IssuesSection 22Liabilities and Equity
-
8/10/2019 21 Financial Instruments Version2011 01
2/71
2011 IFRS Foundation
2
This PowerPoint presentation was prepared by IFRS Foundation educationstaff as a convenience for others. It has not been approved by the IASB.
The IFRS Foundation allows individuals and oranisations to use thispresentation to conduct trainin on the IFRS for SMEs. !owever" if you#a$e any chanes to the PowerPoint presentation" your chanes should beclearly identifiable as not part of the presentation prepared by the IFRSFoundation education staff and the copyriht notice #ust be re#oved fro#every a#ended pae .
This presentation #ay be #odified fro# ti#e to ti#e. The latest version#ay be downloaded fro#%http%&&www.ifrs.or&IFRS'for'S()s&S()'*or$shops.ht#
The accountin re+uire#ents applicable to s#all and #ediu# si,ed entities-S()s are set out in the International Financial Reporting Standard IFRS!
for SMEs" which was issued by the IASB in /uly 200. The IFRS Foundation" the authors" the presenters and the publishers do not
accept responsibility for loss caused to any person who acts or refrainsfro# actin in reliance on the #aterial in this PowerPoint presentation"whether such loss is caused by nelience or otherwise.
http://www.ifrs.org/IFRS+for+SMEs/SME+Workshops.htmhttp://www.ifrs.org/IFRS+for+SMEs/SME+Workshops.htm -
8/10/2019 21 Financial Instruments Version2011 01
3/71
2011 IFRS Foundation
3Sections 1112 3 Introduction
Financial instru#ents split into twosections%
Sec. 11 Basic Financial Instruments
Sec. 12 Other Financial InstrumentsIssues
Toether the two sections cover
reconisin" dereconisin" #easurin"
and disclosin financial assets andfinancial liabilities
-
8/10/2019 21 Financial Instruments Version2011 01
4/71
2011 IFRS Foundation
4Sections 1112 3 Introduction
Section 11 is relevant to all S()s Section 12 is relevant If%
SME owns or issues exotic !inancial
instruments instruments that im"ose
ris#s or rewar$s that are not t%"ical o!
&asic !inancial instruments
SME wants to $o he$'e accountin'
-
8/10/2019 21 Financial Instruments Version2011 01
5/71
2011 IFRS Foundation
(Sections 1112 3 Accountin choice
)ntity #ay choose to apply either% Sections 11 an$ 12 in !ull) or
*eco'nition an$ measurement "ro+isions
o! I,S 3- an$ the $isclosure
reuirements in Sec 11 / 12
0o o"tion to use IF*S -
The option chosen applies to all financial
instru#ents -not individually To chane option" follow Section 10
-
8/10/2019 21 Financial Instruments Version2011 01
6/71
2011 IFRS Foundation
Sections 1112 3 Basic principles
Basic principle of Section 11%
,mortise$ cost mo$el !or all &asic FI
exce"t in+estments in or$inar% or
"re!erence shares that are "u&licl% tra$e$
or whose !air +alue can &e measure$relia&l% these are !air +alue throu'h
"ro!it or loss F567. Basic principle of Section 12%
FI not co+ere$ &% Section 11 are at
F56
-
8/10/2019 21 Financial Instruments Version2011 01
7/71
2011 IFRS Foundation
8Section 11 3 Scope
All basic financial instru#ents e4ceptthose covered by other sections of IFRS
for SMEs%
In+estments in su&) associate) 9 see
Sections -) 14) 1(7 Entit%s own euit% see Sec 22) 27
6eases see Section 2:7
Em"lo%ee &ene!it assets an$ lia&ilitiessee Section 2;7
-
8/10/2019 21 Financial Instruments Version2011 01
8/71
2011 IFRS Foundation
;Sections 1112 3 5efinitions
Financial instru#ent
-
8/10/2019 21 Financial Instruments Version2011 01
9/71
2011 IFRS Foundation
-Sections 1112 3 5efinitions
Basic financial instru#ent6
-
8/10/2019 21 Financial Instruments Version2011 01
10/71
2011 IFRS Foundation
1:Section 11 3 Basic debt instru#ents
5ebt instru#ents are in Section 11 if% *eturns to hol$er are !ixe$) +aria&le
re!erence$ to an o&ser+a&le rate) or
com&ination o! !ixe$ an$ +aria&le
0o s"ecial "ro+ision coul$ cause hol$er
to lose "rinci"al
5re"a%ment con$itions are not contin'ent
on a !uture e+ent 0o s"ecial con$itional returns
-
8/10/2019 21 Financial Instruments Version2011 01
11/71
2011 IFRS Foundation
11Section 11 3 Basic debt instru#ents
)4a#ples of basic debt instru#ents% ra$e accounts an$ notes recei+a&le an$
"a%a&le 6oans !rom &an#s an$ other 3r$ "arties
,ccounts "a%a&le in !orei'n currenc% 6oans to?!rom su&si$iaries or associates
that are $ue on $eman$ =e&t instrument that &ecomes
imme$iatel% $ue i! issuer $e!aults All of these #easured at a#ortised cost
-
8/10/2019 21 Financial Instruments Version2011 01
12/71
2011 IFRS Foundation
12Section 11 3 Basic debt instru#ents
)4a#ples of 78T basic debt instru#ents% In+estment in con+erti&le or "utta&le
shares or $e&t Swa"s) !orwar$s) !utures) o"tions) ri'hts)
an$ other $eri+ati+es 6oans with unusual "re"a%ment
con$itions &ase$ on tax chan'e)
accountin' chan'e) lin#e$ to com"an%
"er!ormance7 All of these are F9TP: under Section 12
-
8/10/2019 21 Financial Instruments Version2011 01
13/71
2011 IFRS Foundation
13Section 11 3 Reconition and #easure#ent
Initial reconition%
@hen entit% &ecomes a "art% to the
contractual "ro+isions o! the instrument
IFRS for SMEsallows Au$'ement
re'ar$in' tra$e $ate +s settlement $ateaccountin') &ut &e consistent
-
8/10/2019 21 Financial Instruments Version2011 01
14/71
2011 IFRS Foundation
14Section 11 3 Reconition and #easure#ent
Initial #easure#ent%
,t transaction "rice
Inclu$e transaction costs exce"t !or FI
that will &e measure$ at F56
Im"ute interest i! "a%ment is $e!erre$
&e%on$ normal terms or &elowmar#et
interest
-
8/10/2019 21 Financial Instruments Version2011 01
15/71
2011 IFRS Foundation
1(Section 11 3 Reconition and #easure#ent
Initial reconition#easure#ent e4a#ples%
:oan #ade to another entity% Measure
at 5 o! interest an$ "rinci"al "a%ments
;oods sold to custo#er -purchased
fro# supplier on nor#al credit ter#s%Measure recei+a&le "a%a&le7 at
un$iscounte$ in+oice "rice
-
8/10/2019 21 Financial Instruments Version2011 01
16/71
2011 IFRS Foundation
1Section 11 3 Reconition and #easure#ent Initial reconition#easure#ent e4a#ples%
;oods sold -purchased on 2year interest freecredit% Measure at current cash sale "rice or 5 o!
recei+a&le or "a%a&le
)4a#ple% *e sell oods for 1"000" pay#ent due 2
years" interestfree. ?@. IRR = >.
/ournal entries 5ebit ?@
Sales Revenue >?@
)nd of year 1 Receivable
> 4 >?@ = Interest Revenue
-
8/10/2019 21 Financial Instruments Version2011 01
17/71
2011 IFRS Foundation
18Section 11 3 Reconition and #easure#ent
Subse+uent #easure#ent%
5ebt instru#ents in the scope of Section
11 -even if publicly traded%
,mortise$ cost usin' the e!!ecti+e
interest metho$ )+uity instru#ents in scope of Section 11%
I! "u&licl% tra$e$ or F can &e
measure$ relia&l%C F56,ll othersC cost less im"airment
-
8/10/2019 21 Financial Instruments Version2011 01
18/71
2011 IFRS Foundation
1;Section 11 3 Reconition and #easure#ent
*hat is Ca#ortised costDE
,mount measure$ at initial reco'nition
Minus re"a%ments o! "rinci"al
5lus or minus cumulati+e amortisation o!
an% $i!!erence &etween initial
measurement an$ maturit% amount usin'
e!!ecti+e interest metho$7
Minus !or assets7 re$uction !or im"airmentor uncollecti&ilit%
-
8/10/2019 21 Financial Instruments Version2011 01
19/71
2011 IFRS Foundation
1-Section 11 3 Reconition and #easure#ent
*hat is Ceffective interest #ethodDE
E!!ecti+e interest is rate that exactl% $iscounts!uture cash "a%ments recei"ts7 to the carr%in'
amount ,lso calle$ Internal *ate o! *eturn
,mortise$ cost D 5 o! !uture cash recei"ts"a%ments7 $iscounte$ at e!!ecti+e interest rate
Interest ex"ense income7 D carr%in' amount
at &e'innin' o! "erio$ x e!!ecti+e interest rate
-
8/10/2019 21 Financial Instruments Version2011 01
20/71
2011 IFRS Foundation
2:Section 11 3 )ffective interest e4a#ple
1&1&0 buy ?year bond for 00" transaction cost =
?0" cash interest = G0&year" #andatory rede#ptionat 1"100 at H1&12&G.
ear H6
-G0 1"0HH.>
H 1"0HH.> @1.G -G0 1"0?.>H
G 1"0?.>H @G.1 -G0 1"100.00
*6.9583% is the rate that exactly discounts the cash flows to 950.00
-
8/10/2019 21 Financial Instruments Version2011 01
21/71
2011 IFRS Foundation
21Section 11 3 Reconition and #easure#ent
*hat is Cfair valueDE,mount !or which FI coul$ &e sol$ or
settle$ in an arms len'th transaction BestC uote$ mar#et "rice in an acti+e
mar#et &i$ "rice7 0extC 5rice in a recent transaction !or
i$entical asset unless circumstances ha+e
chan'e$7
Estimate usin' a +aluation techniue amo$el7
-
8/10/2019 21 Financial Instruments Version2011 01
22/71
2011 IFRS Foundation
22Section 11 3 I#pair#ent
I#pair#ent only applies to FI #easured at
cost or a#ortised cost
At each reportin date" loo$ for evidence
that F9 is below carryin a#ount
Si'ni!icant !inancial $i!!icult% o! issuer
=e!ault or $elinuenc%
,&normal concession 'rante$ to $e&tor &%
cre$itor 5ro&a&le $e&tor &an#ru"tc% or reor'.
-
8/10/2019 21 Financial Instruments Version2011 01
23/71
2011 IFRS Foundation
23Section 11 3 I#pair#ent
I#pair#ent assess#ent%
In$i+i$uall% !or all euit% instruments
In$i+i$uall% !or $e&t instruments that are
in$i+i$uall% si'ni!icant
For other $e&t instruments) either
in$i+i$uall% or 'rou"e$ &ase$ on similar ris#
characteristics
I#pair#ent reconition% @rite$own is reco'nise$ in 5/6
-
8/10/2019 21 Financial Instruments Version2011 01
24/71
2011 IFRS Foundation
24Section 11 3 I#pair#ent
(easure#ent of the i#pair#ent loss%
5ebt instru#ents% =i!!erence &etweencarr%in' amount an$ current 5 o! estimate$
cash !lows $iscounte$ at assets ori'inal
e!!ecti+e interest rate. se current rate i!
+aria&le.7 )+uity instru#ents% =i!!erence &etween
carr%in' amount an$ &est estimate
a""roximation7 o! the amount mi'ht &e Gero7that entit% woul$ recei+e i! asset were sol$ at
re"ortin' $ate.
-
8/10/2019 21 Financial Instruments Version2011 01
25/71
2011 IFRS Foundation
2(Section 11 3 I#pair#ent
Reversal of an i#pair#ent loss%
*euire$ i! the "ro&lem causin' the ori'inal
im"airment re$uces
@rite u" &ut not to more than what carr%in'
amount woul$ ha+e &een ha$ noim"airment &een reco'nise$ ie not to F
&ut to new amortise$ cost7
*e+ersal reco'nise$ in 5/6
-
8/10/2019 21 Financial Instruments Version2011 01
26/71
2011 IFRS Foundation
2Section 11 3 5ereconition
5ereconition of a financial asset%
=ereco'nition D remo+e !rom &alance sheet
Onl% whenCa. *i'hts to cash !lows ex"ire or settle$
&. Su&stantiall% all ris#s an$ rewar$s cash!lows7 trans!erre$ to other entit%
c. rans!erre$ some &ut not su&stantiall% all
ris#s an$ rewar$s) an$ "h%sical control o!
asset trans!erre$ to another "art% who hasthe ri'ht to sell the asset to an unrelate$
thir$ "art%.
-
8/10/2019 21 Financial Instruments Version2011 01
27/71
2011 IFRS Foundation
28Section 11 3 5ereconition
5ereconition of a financial asset%
In case c7 a&o+eC
=ereco'nise ol$ asset entirel%) an$
*eco'nise se"aratel% an% ri'hts an$
o&li'ations retaine$ or create$ in the trans!ermeasure at !air +alue7
I! trans!er $oes not result in $ereco'nition) #ee"
trans!erre$ asset on &oo#s an$ reco'nise
!inancial lia&ilit% !or the consi$eration recei+e$ =o not o!!set
-
8/10/2019 21 Financial Instruments Version2011 01
28/71
2011 IFRS Foundation
2;Section 11 3 5ereconition
5ereco. of financial asset 3 e4a#ples%
(ust dereconise% Sell recei+a&les to &an#
&ut we continue to collect an$ remit) !or a
han$lin' !ee. Ban# assumes cre$it ris#.
(ay not dereconise% Same !acts exce"tentit% a'rees to &u% &ac# an% recei+a&les in
arrears !or more than 12: $a%s. Entit%
continues to reco'nise the recei+a&les until
collecte$ or writeo!! as uncollecti&le.
-
8/10/2019 21 Financial Instruments Version2011 01
29/71
2011 IFRS Foundation
2-Section 11 3 5ereconition
5ereconition of a financial liability%
Onl% when extin'uishe$) that isCa. =ischar'e$
&.
-
8/10/2019 21 Financial Instruments Version2011 01
30/71
2011 IFRS Foundation
3:Section 11 35isclosure
5isclose accountin policies for FI
5isclose financial assets and liabilities bycateories in the balance sheet%
Euit% or $e&t at F56
=e&t at amortise$ cost Euit% measure$ at cost less im"airment
6ia&ilities at F56
6ia&ilities at amortise$ cost
-
8/10/2019 21 Financial Instruments Version2011 01
31/71
2011 IFRS Foundation
31Section 11 3 5isclosure
-
8/10/2019 21 Financial Instruments Version2011 01
32/71
2011 IFRS Foundation
32Section 11 3 5isclosure
Ite#s of inco#e" e4pense" ains and
losses%
-
8/10/2019 21 Financial Instruments Version2011 01
33/71
2011 IFRS Foundation
33Section 12 3 Reconition and #easure#ent
Initial reconition%
@hen entit% &ecomes a "art% to thecontractual "ro+isions o! the instrument
Initial #easure#ent%
,t F normall% the transaction "rice7 ransaction costs are char'e$ to ex"ense
-
8/10/2019 21 Financial Instruments Version2011 01
34/71
2011 IFRS Foundation
34Section 12 3 Reconition and #easure#ent
Subse+uent #easure#ent%
,t F56 exce"tC Euit% instrument that is not "u&licl%
tra$e$ an$ cannot 'et F relia&l%) then
measure at cost less im"airment,lso measure a contract lin#e$ to such
euit% instrument at cost less im"airment
I! "re+iousl% at F56) &ut now a relia&le F
measure is no lon'er a+aila&le) treat mostrecent F measure as cost 'oin' !orwar$.
-
8/10/2019 21 Financial Instruments Version2011 01
35/71
2011 IFRS Foundation
3(Section 12 3 !ede accountin
C!edinD and Chede accountinD are two
different thins *hat is hedinE
Mana'in' ris#s &% usin' one !inancial
instrument he$'in' instrument7 "ur"osel%to o!!set the +aria&ilit% in F or cash !lows
o! a reco'nise$ asset or lia&ilit%) !irm
commitment) or !uture cash !lows he$'e$
item7
-
8/10/2019 21 Financial Instruments Version2011 01
36/71
2011 IFRS Foundation
3Section 12 3 !ede accountin
*hat is hede accountinE
Matchin' the chan'e in F o! the he$'in'
instrument an$ the he$'e$ item in the
same income statement
He$'e accountin' is onl% an issue whennormal accountin' woul$ "ut the two F
chan'es in $i!!erent "erio$s sometimes
re!erre$ to as an accountin' mismatch
-
8/10/2019 21 Financial Instruments Version2011 01
37/71
2011 IFRS Foundation
38Section 12 3 !ede accountin
The hederDs accountin dile##a%
I ha+e a ris# in an asset or lia&ilit% measure$ atamortise$ cost ,n% chan'e in F or cash !lows !rom that
asset or lia&ilit% is reco'nise$ onl% when
realise$ in cash asset is sol$) lia&ilit% issettle$) cash !lows occur7
o he$'e) I &u% a $eri+ati+e) which is measure$
at F56 at each re"ortin' $ate
I need special hede accountin to fi4
this C#is#atchD
-
8/10/2019 21 Financial Instruments Version2011 01
38/71
2011 IFRS Foundation
3;Section 12 3 !ede accountin
The hederDs accountin dile##a 3 an
illustration% Entit% has note "a%a&le at a !ixe$ rate o! interest
$ue in 3 %ears. 0ote measure$ at amortise$ cost.
Bu%s swa" to con+ert recei+e !ixe$ interest to "a%
+aria&le. Swa" is measure$ at F56.
En$ o! %ear 1) interest rate $eclines. here!ore
loss on $eri+ati+e imme$iatel% reco'nise$ &ut
an o!!settin' 'ain not %et reco'nise$7 &ecause
we will &e "a%in' the lower +aria&le rate o!
interest in !uture.
S ti 12 ! d ti
-
8/10/2019 21 Financial Instruments Version2011 01
39/71
2011 IFRS Foundation
3-Section 12 3 !ede accountin
!ede accountin #atchin the ain -loss
on the derivative with the loss -ain on theheded ite#.
!ede accountin is optional.
S ti 12 ! d ti
-
8/10/2019 21 Financial Instruments Version2011 01
40/71
2011 IFRS Foundation
4:Section 12 3 !ede accountin
To +ualify for hede accountin%
=esi'nate an$ $ocument he$'in'relationshi" u" !ront
-
8/10/2019 21 Financial Instruments Version2011 01
41/71
2011 IFRS Foundation
41Section 123 !ede accountin
!eded ris$ #ust be -12.1@%
Interest rate ris# in $e&t measure$ at cost
FJ or interest rate ris# in !irm commitment
or hi'hl% "ro&a&le !orecast transaction
5rice ris# in a commo$it% owne$ or to &eacuire$ in a !irm commitment or hi'hl%
"ro&a&le !orecast transaction
FJ ris# in a net in+estment in a !orei'no"eration
S ti 12 ! d ti
-
8/10/2019 21 Financial Instruments Version2011 01
42/71
2011 IFRS Foundation
42Section 12 3 !ede accountin
!eded ris$ #ust be -12.1@%
FJ ris# in $e&t instrument measure$ at cost is notin this list. @h%K
n$er 3:.1: FJ7 the $e&t is translate$ at
s"ot rate an$ FJ 'ain or loss is reco'nise$ in
"ro!it or loss
-
8/10/2019 21 Financial Instruments Version2011 01
43/71
2011 IFRS Foundation
43Section 12 3 !ede accountin
!edin instru#ent #ust be -12.1>%
Interest rate swa") FJ swa") FJ !orwar$)commo$it% !orwar$
Entere$ into with external "art%
0otional amount D "rinci"al or notionalamount o! he$'e$ item
S"eci!ie$ maturit% not later than maturit% or
settlement o! he$'e$ item
-
8/10/2019 21 Financial Instruments Version2011 01
44/71
2011 IFRS Foundation
44Section 12 3 !ede accountin
!ede of fi4ed interest rate ris$ or
co##odity price ris$ of co##odity held *eco'nise he$'in' instrument as asset or
lia&ilit%
-
8/10/2019 21 Financial Instruments Version2011 01
45/71
2011 IFRS Foundation
4(Section 12 3 !ede accountin
!ede of fi4ed interest rate ris$ or
co##odity price ris$ of co##odity held-continued
I! he$'e$ ris# was !ixe$ interest in $e&t
measure$ at cost) reco'nise in 5/6 the"erio$ic net settlements !rom the $eri+ati+e
interest rate swa"7 in the "erio$ in which
the net settlements occur.
Section 12 !ede accountin
-
8/10/2019 21 Financial Instruments Version2011 01
46/71
2011 IFRS Foundation
4Section 12 3 !ede accountin
)4a#ple 3 Assu#ptions%
Entit% &orrows 1):::) 3 %ears) (L !ixe$ rate)"a%a&le measure$ at amortise$ cost
He$'e$ with a $eri+ati+e whose +alue is lin#e$ to
an interest rate in$ex
En$ o! %ear 1) mar#et rate D L. F o! 1):::
"a%a&le 2 %ears L D 1)::: x .;;--- D ;-:) &ut
this 11: 'ain is not reco'nise$
alue o! the $eri+ati+e $eclines to 112 0ote there is small ine!!ecti+eness D 2
48Section 12 !ede accountin
-
8/10/2019 21 Financial Instruments Version2011 01
47/71
2011 IFRS Foundation
48Section 12 3 !ede accountin Balance sheet at ti#e loan is #ade%
-
8/10/2019 21 Financial Instruments Version2011 01
48/71
2011 IFRS Foundation
4;Section 12 3 !ede accountin
-
8/10/2019 21 Financial Instruments Version2011 01
49/71
2011 IFRS Foundation
4-Section 12 3 !ede accountin
!ede of fi4ed interest rate ris$ and
co##odity price ris$ -continued =iscontinue he$'e accountin' whenC
He$'in' instrument ex"ires
He$'e no lon'er meets con$itions Entit% re+o#es $esi'nation
,n% 'ain or loss that was inclu$e$ in the
carr%in' amount o! the he$'e$ item is
amortise$ to 5/6 o+er remainin' li!e o!
he$'e$ item.
(:Section 12 3 !ede accountin
-
8/10/2019 21 Financial Instruments Version2011 01
50/71
2011 IFRS Foundation
(:Section 12 3 !ede accountin
!ede of variable interest rate ris$" F or
co##odity price ris$ of co##odity held"hihly probable forecast transaction" or net
invest#ent in forein operation
*eco'nise chan'e in F o! he$'in'instrument in O
-
8/10/2019 21 Financial Instruments Version2011 01
51/71
2011 IFRS Foundation
(1Section 12 !ede accountin
!ede of variable interest rate ris$" F or
co##odity price ris$ of co##odity held"hihly probable forecast transaction" or net
invest#ent in forein operation -continued
I! he$'e$ ris# was +aria&le interest in $e&t
measure$ at cost) reco'nise in 5/6 the
"erio$ic net settlements !rom the interest
rate swa" in the "erio$ in which the net
settlements occur.This is called
-
8/10/2019 21 Financial Instruments Version2011 01
52/71
2011 IFRS Foundation
(2Section 12 !ede accountin
)4a#ple 3 Assu#ptions%
Entit% sells 'oo$s !or 1)::: !loatin' rate 3%ear note recei+a&le
Interest rate ris# mana'e$ with a $eri+ati+e
interest rate swa"7 En$ o! %ear 1 interest rates increase 5
o! cumulati+e cash !lows increase &% 1::
But F o! swa" $ecreases &% 1:( 0oteC Some he$'e ine!!ecti+eness
(3Section 12 3 !ede accountin
-
8/10/2019 21 Financial Instruments Version2011 01
53/71
2011 IFRS Foundation
(3Section 12 !ede accountin
8penin balance sheet%
*ecei+a&le 1):::Euit% 1):::
Ineffective portion of hede%
5/6> (>O
-
8/10/2019 21 Financial Instruments Version2011 01
54/71
2011 IFRS Foundation
(4Section 12 !ede accountin
=eri+ati+e 6ia&ilit%7 1:(
Euit% --(
6)ffective portion of the hede -loss on
derivative" which will be a#ortised to PK: as
the hiher floatin rate interest pay#ents are
earned and reconised in PK: in years 2 K H
((Section 12 3 !ede accountin
-
8/10/2019 21 Financial Instruments Version2011 01
55/71
2011 IFRS Foundation
Section 12 !ede accountin
!ede of variable interest rate ris$ etc...
=iscontinue he$'e accountin' whenC He$'in' instrument ex"ires
He$'e no lon'er meets con$itions
Forecast transaction no lon'er "ro&a&le Entit% re+o#es $esi'nation
,n% "rior 'ain or loss on !orecast
transaction that was reco'nise$ in O
-
8/10/2019 21 Financial Instruments Version2011 01
56/71
2011 IFRS Foundation
5isclosures relatin to hede accountin
For each t%"e o! he$'eC =escri"tion o! he$'eris#) he$'e$ item) instrument7
S"ecial $isclosures !or he$'e o! !ixe$ interest
rate ris# an$ commo$it% "rice ris# o! commo$it%
hel$
S"ecial $isclosures !or he$'e o! +aria&le interest
rate ris#) FJ or commo$it% "rice ris# o!
commo$it% hel$) hi'hl% "ro&a&le !orecast
transaction) or net in+estment in !orei'n o"eration
(8Section 22 3 :iabilities and e+uity
-
8/10/2019 21 Financial Instruments Version2011 01
57/71
2011 IFRS Foundation
+ y
Scope of Section 22
5rinci"les !or classi!%in' an instrument as$e&t or euit%
Ori'inal issuance o! shares an$ other
euit% instruments Sale o! o"tions) ri'hts) warrants
Bonus issues an$ share s"lits
Issuance o! con+erti&le $e&tcontinues...
(;Section 22 3 :iabilities and e+uity
-
8/10/2019 21 Financial Instruments Version2011 01
58/71
2011 IFRS Foundation
+ y
Scope of Section 22" continued
reasur% shares =istri&utions to owners
0oncontrollin' interest an$ transactions in
shares o! a consoli$ate$ su&si$iar%
(-Section 22 3 :iabilities and e+uity
-
8/10/2019 21 Financial Instruments Version2011 01
59/71
2011 IFRS Foundation
+ y
Principles for classifyin an instru#ent as
debt or e+uity Euit% D resi$ual interest in assets minus
lia&ilities
6ia&ilit% is a "resent o&li'ation entit% $oesnot ha+e a ri'ht to a+oi$ "a%in' cash7
-
8/10/2019 21 Financial Instruments Version2011 01
60/71
1Section 22 3 :iabilities and e+uity
-
8/10/2019 21 Financial Instruments Version2011 01
61/71
2011 IFRS Foundation
The followin are liabilities%
Instrument is "a%a&le on liui$ation) &utthe amount is su&Aect to a maximum
ceilin'
Entit% is o&li'e$ to ma#e "a%ments &e!oreliui$ation such as man$ator% $i+i$en$
Man$atoril% re$eema&le "re!erence
shares
2Section 22 3 :iabilities and e+uity
-
8/10/2019 21 Financial Instruments Version2011 01
62/71
2011 IFRS Foundation
(e#bersD shares in a cooperative are
e+uity only if%
-
8/10/2019 21 Financial Instruments Version2011 01
63/71
2011 IFRS Foundation
8riinal issuance of shares and other e+uity
instru#ents *eco'nise when euit% is issue$ an$ su&scri&er
is o&li'ate$ to in+est
I! euit% is issue$ &e!ore the entit% 'ets cash) the
recei+a&le is an o!!set to euit% not an asset7 I! entit% 'ets nonre!un$a&le7 cash &e!ore euit%
is issue$) euit% is increase$
0o increase in euit% is reco'nise$ !or su&scri&e$
shares that ha+e not &een issue$ an$ entit% has
not recei+e$ cash
4Section 22 3 :iabilities and e+uity
-
8/10/2019 21 Financial Instruments Version2011 01
64/71
2011 IFRS Foundation
Sale of options" rihts" warrants
Same "rinci"les as !or ori'inal issuance o!shares "re+ious sli$e7
Transaction costs in issuin e+uity
instru#ents,ccounte$ !or as a re$uction o! euit% not
an ex"ense7
(Section 22 3 :iabilities and e+uity
-
8/10/2019 21 Financial Instruments Version2011 01
65/71
2011 IFRS Foundation
Bonus issues -stoc$ dividends and share
splits hese $o not chan'e euit%
,ccounte$ !or as reclassi!ication o!
amounts within euit% out o! retaine$earnin's an$ into "ermanent ca"ital7
,mounts reclassi!ie$ shoul$ &e &ase$ on
local laws
Section 22 3 :iabilities and e+uity
-
8/10/2019 21 Financial Instruments Version2011 01
66/71
2011 IFRS Foundation
Issuance of convertible debt
Must account se"aratel% !or $e&t com"onent an$euit% com"onent con+ersion ri'ht7
=e&t "rocee$s D F o! similar ris# $e&t without
con+ersion !eature 5 calculation7
Euit% "rocee$s are the resi$ual
*ecor$e$ at issuance not su&seuentl% re+ise$
Su&seuentl%) $e&t $iscount D a$$itional interest
ex"ense e!!ecti+e interest metho$7
8Section 22 3 :iabilities and e+uity
-
8/10/2019 21 Financial Instruments Version2011 01
67/71
2011 IFRS Foundation
Issuance of convertible debt )4a#ple
1?1?J1 issue at "ar a 4L con+erti&le &on$) "ar an$
maturit% amount D (:):::) maturit% in ( %ears
I! no con+ersion !eature) woul$ ha+e "ai$ L
-
8/10/2019 21 Financial Instruments Version2011 01
68/71
2011 IFRS Foundation
5ate Interest
paid
Intereste4pense
L
A#ort. ofdiscount
Bonddis
count
7et bondliability
1&1&1 G"212 G?"@>>
H1&12&1 2"000 2"@G@ @G@ H"G? G"?H?
H1&12&2 2"000 2"@2 @2 2"@H G@"H2@H1&12&H 2"000 2">G0 >G0 1">HH G>"1@
H1&12&G 2"000 2">0 >0 GH G"0?@
H1&12&? 2"000 2"GH GH 0 ?0"000
H1&12&1% 5ebit interest e4pense 2"@G@
-
8/10/2019 21 Financial Instruments Version2011 01
69/71
2011 IFRS Foundation
Treasury shares
Euit% instruments entit% has issue$ an$later reacuire$
Measure at cash "ai$ or F o! other
consi$eration 'i+en to acuire P 5resent as $e$uction !rom euit% not
asset7
0o 'ain or loss reco'nise$ on "urchase)
sale) or cancellation
8:Section 22 3 :iabilities and e+uity
-
8/10/2019 21 Financial Instruments Version2011 01
70/71
2011 IFRS Foundation
5istributions to owners
I! cash measurement D cash "ai$ I! noncash measurement D F o! assets
$istri&ute$,mount re$uces euit%
I! entit% 'ets tax $e$uction !or $i+i$en$) tax
&ene!it is a$Austment o! euit% 0ot re$uction o! income tax ex"ense
I! entit% "a%s withhol$in' tax on $i+i$en$s"ai$) tax re$uces euit% as "art o! $i+i$en$
81Section 22 3 :iabilities and e+uity
-
8/10/2019 21 Financial Instruments Version2011 01
71/71
2011 IFRS Foundation
7oncontrollin interest -7