Ias 32

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Summary of IAS 32
Objective of IAS 32
The stated objective of IAS 32 is to establish principles for presenting financial instruments as liabilities or equity and for offsetting financial assets and liabilities. [IAS 32.1] IAS 32 addresses this in a number of ways:

* clarifying the classification of a financial instrument issued by an entity as a liability or as equity * prescribing the accounting for treasury shares (an entity's own repurchased shares) * prescribing strict conditions under which assets and liabilities may be offset in the balance sheet IAS 32 is a companion to IAS 39 Financial Instruments: Recognition and Measurement and IFRS 9Financial Instruments. IAS 39 deals with, among other things, initial recognition of financial assets and liabilities, measurement subsequent to initial recognition, impairment, derecognition, and hedge accounting. IAS 39 is progressively being replaced by IFRS 9 as the IASB completes the various phases of its financial instruments project. Scope

IAS 32 applies in presenting and disclosing information about all types of financial instruments with the following exceptions: [IAS 32.4] * interests in subsidiaries, associates and joint ventures that are accounted for under IAS 27Consolidated and Separate Financial Statements, IAS 28 Investments in Associates or IAS 31Interests in Joint Ventures (or, for annual periods beginning on or after 1 January 2013,IFRS 10 Consolidated Financial Statements, IAS 27 Separate Financial Statements and IAS 28Investments in Associates and Joint Ventures). However, IAS 32 applies to all derivatives on interests in subsidiaries, associates, or joint ventures. * employers' rights and obligations under employee benefit plans (see IAS 19 Employee Benefits) * insurance contracts(see IFRS 4 Insurance Contracts). However, IAS 32 applies to derivatives that are embedded in insurance contracts if they are required to be accounted separately by IAS 39 * financial instruments that are within the scope of IFRS 4 because they contain a discretionary participation feature are only exempt from applying paragraphs 15-32 and AG25-35 (analysing debt and equity components) but are subject to all other IAS 32 requirements * contracts and obligations under share-based payment transactions (see IFRS 2 Share-based Payment) with the following exceptions: * this standard applies to contracts within the scope of IAS 32.8-10 (see below) * paragraphs 33-34 apply when accounting for treasury shares purchased, sold, issued or cancelled by employee share option plans or similar arrangements IAS 32 applies to those contracts to buy or sell a non-financial item that can be settled net in cash or another financial instrument, except for 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. [IAS 32.8] Key definitions [IAS 32.11]

Financial instrument: a contract that gives rise to a financial asset of one entity and a financial liability or equity instrument of another entity. Financial asset: any asset that is:
* cash
* an equity instrument of another entity
* a contractual right
* to receive cash or another financial asset from another entity; or * to exchange financial assets or financial liabilities with another entity under conditions that are potentially favourable to the entity; or * a contract that will or may be settled in the entity's own equity instruments and is: * a non-derivative for which the entity is or may be obliged to receive a variable number of the entity's own equity instruments * a derivative that will or may be settled other than by the exchange of a fixed amount of cash or another financial asset for a fixed number of the entity's own equity instruments. For this purpose the entity's own...
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