(IFRS) for Small and Medium-sized Entities (SMEs)

IFRS FOR SMES – JULY 2009Derecognition of a financial liability11.36 An entity shall derecognise a financial liability (or a part of a financial liability)only when it is extinguished—ie when the obligation specified in the contract isdischarged, is cancelled or expires.11.37 If an existing borrower and lender exchange financial instruments withsubstantially different terms, the entities shall account for the transaction as anextinguishment of the original financial liability and the recognition of a newfinancial liability. Similarly, an entity shall account for a substantialmodification of the terms of an existing financial liability or a part of it (whetheror not attributable to the financial difficulty of the debtor) as an extinguishmentof the original financial liability and the recognition of a new financial liability.11.38 The entity shall recognise in profit or loss any difference between the carryingamount of the financial liability (or part of a financial liability) extinguished ortransferred to another party and the consideration paid, including any non-cashassets transferred or liabilities assumed.Disclosures11.39 The disclosures below make reference to disclosures for financial liabilitiesmeasured at fair value through profit or loss. Entities that have only basicfinancial instruments (and therefore do not apply Section 12) will not have anyfinancial liabilities measured at fair value through profit or loss and hence willnot need to provide such disclosures.Disclosure of accounting policies for financial instruments11.40 In accordance with paragraph 8.5, an entity shall disclose, in the summary ofsignificant accounting policies, the measurement basis (or bases) used forfinancial instruments and the other accounting policies used for financialinstruments that are relevant to an understanding of the financial statements.Statement of financial position – categories of financialassets and financial liabilities11.41 An entity shall disclose the carrying amounts of each of the following categoriesof financial assets and financial liabilities at the reporting date, in total, either inthe statement of financial position or in the notes:(a)(b)(c)(d)financial assets measured at fair value through profit or loss(paragraph 11.14(c)(i) and paragraphs 12.8 and 12.9).financial assets that are debt instruments measured at amortised cost(paragraph 11.14(a)).financial assets that are equity instruments measured at cost lessimpairment (paragraph 11.14(c)(ii) and paragraphs 12.8 and 12.9).financial liabilities measured at fair value through profit or loss(paragraphs 12.8 and 12.9).66 © IASCF