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AS) 32
Financial Instruments: Presentation
Group no: 7
Priyanka U Reddy – 1928849
Gnana Prasuna C – 1928836
Pushpa Keerthi K S -1928842
Tejaswini Vennapusa - 1928852
OBJECTIVE
The objective of this Standard is to establish principles for
presenting financial instruments as liabilities or equity and for
offsetting financial assets and financial liabilities. It applies to
the classification of financial instruments, from the perspective
of the issuer, into financial assets, financial liabilities and
equity instruments; the classification of related interest,
dividends, losses and gains; and the circumstances in which
financial assets and financial liabilities should be offset.
The principles in this Standard complement the
principles for recognizing and measuring
financial assets and financial liabilities in Ind
AS 39 Financial Instruments: Recognition and
Measurement, and for disclosing information
about them in Ind AS 107 Financial
Instruments: Disclosures.
SCOPE
This Standard shall be applied by all entities to all types of financial
instruments except:
those interests in subsidiaries, associates or joint ventures that are
accounted for in accordance with Ind AS 27 Consolidated and Separate
Financial Statements, Ind AS 28 Investments in Associates or Ind AS 31
Interests in Joint Ventures.
employers’ rights and obligations under employee benefit plans, to which
Ind AS 19 Employee Benefits applies.
insurance contracts as defined in Ind AS 104 Insurance Contracts.
However, this Standard applies to derivatives that are embedded in
insurance contracts if Ind AS 39 requires the entity to account for them
separately.
financial instruments that are within the scope of Ind AS 104
because they contain a discretionary participation feature.
purchase plans, and all other share-based payment arrangements.
This Standard shall be applied to those contracts to buy or sell a
non- financial item that can be settled net in cash or another
financial instrument, or by exchanging financial instruments, as if
the contracts were financial instruments, with the exception of
contracts that were entered into and continue to be held for the
purpose of the receipt or delivery of a non-financial item in
accordance with the entity’s expected purchase, sale or usage
requirements.
DEFINITIONS
Financial asset: It includes
a) cash,
b) equity instrument of another entity,
c) contractual right:
• To receive cash or financial asset.
• To exchange of FA or FL under conditions which are favorable.
d) Own equity:
• Non-derivative – Receive variable number of own equity.
• Derivative - Exchange other than fixed for fixed.
.
Financial liability: It includes
a)Contractual obligations
• To deliver cash or FA.
• To exchange FA or FL under unfavorable conditions.
b)Own equity
• Non derivative – deliver variable no. of own equity.
• Derivative - Exchange other than fixed for fixed.
Equity: The residual interest in assets of the entity after
deducting its liability.
Equity = Assets - Liability
PRESENTATION
The issuer of a financial instrument shall classify the
instrument, or its component parts, on initial recognition as a
financial liability, a financial asset or an equity instrument in
accordance with the substance of the contractual arrangement
and the definitions of a financial liability, a financial asset
and an equity instrument.
DISCLOSURE