What are the major similarities and differences between IAS 32 Financial Instruments: Disclosure and Presentation and...

What are the major similarities and differences between IAS 32 Financial Instruments: Disclosure and Presentation and IFRS 7 Financial Instruments: Disclosures?

Expert Solution

There are four standards that primarily deal with accounting for financial instruments namely,

IAS 32 – Financial Instruments: Presentation
IAS 39 – Financial Instruments: Recognition and Measurement
IFRS 7 – Financial Instruments: Disclosures
IFRS 9 – Financial Instruments.

The scope of the above standards are is very wide and cover all types of financial instruments like investments in bonds and shares, borrowings, receivables, payables, and derivatives. IAS 32 principles provide for presenting financial instruments as liabilities or equity and when financial assets and financial liabilities can be offset. The Standard also deals with classification of related interest, dividends and gains and losses. On the other hand, IFRS requires entities to provide disclosures that enable users to evaluate the significance of financial instruments to the entity’s financial position and performance and the nature and extent of risks from financial instruments in quantitative and qualitative terms that the entity is exposed and the measures it undertook to manage those risks.

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