Discuss the Disclosure Requirements in AASB 7 Financial Instruments Disclosure

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The Answer is extensivedisclosures required by AASB 7 are summarised below.1 Paragraph 8 requires disclosure,on the face of the statement of financial position or in thenotes,of the carrying amounts of each of the following categories of financial instruments:• financial assets measured at fair value through profit or loss,showing separately thosedesignated as such on initial recognition and those mandatorily measured at fair value inaccordance with AASB 9 (see paragraphs 9-11 for disclosures required);• financial liabilities measured at fair value through profit or loss,showing separately thosedesignated as such on initial recognition and those that meet the definition of held for tradingin AASB 9;• financial assets measured at amortised cost;• financial liabilities measured at amortised cost; and• financial assets measured at fair value through other comprehensive income.2 If a financial asset has been reclassified as one measured at amortised cost rather than fairvalue,or vice versa,the date and the reason for the reclassification in respect of the change inthe entity's business model must be disclosed together with the amount (para.12B).3 Paragraphs 13A-F require detailed disclosures of financial assets and financial liabilities thathave been offset as allowed by paragraph 42 of AASB 132.It is important for users to be awareof any material offsetting of financial assets and financial liabilities.4 Paragraph 14 requires the disclosure of the carrying amount of financial assets that an entityhas pledged for liabilities or contingent liabilities,and the terms and conditions of the pledge.Paragraph 15 requires specified disclosures where an entity holds collateral that it is permittedto sell or repledge in the absence of default by the owner of the collateral.5 For financial assets carried at fair value through other comprehensive income as allowed byAASB 9,paragraph 16A requires that a loss allowance must be disclosed in the notes.6 If a compound financial instrument has multiple embedded derivatives whose values areinterdependent,it must disclose the existence of those features (para.17).7 If there have been defaults and breaches in relation to loans payable,specified disclosures arerequired (paras 18 and 19).8 Paragraph 20 requires specified disclosures of material items of income,expenses,gains andlosses on the face of either the statement of comprehensive income or the statement of changes in equity or in the notes.Paragraph 20A requires disclosure of the gain or loss recognised in the statement ofcomprehensive income arising from the derecognition of financial assets measured atamortised cost.The gains and losses must not be netted and must be shown separately.10 Paragraph 21 requires compliance with paragraph 108 of AASB 101 'Presentation of FinancialStatements' in relation to the disclosure of accounting policies for financial instruments.11 Disclosures in relation to hedge accounting are specified in paragraphs 21A-24G.12 In paragraphs 25-30,specified disclosures on fair value are required.

Discuss the Disclosure Requirements in AASB 7 Financial Instruments Disclosure

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