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Title: ACCA Part-2 (F7) IAS 32 _ Financial Instrument _ Presentation
Description: A concise summary of IAS 32 – Financial Instruments (Presentation) for ACCA Part-2 F7 Financial Reporting. Includes formulas, practical ways to remember them, and easy-to-understand notes. Ideal for exam preparation and mastering the presentation of financial instruments.

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πŸ“’

IAS 32 - Financial Instrument :
Presentation
Definition
Financial instrument >> any contract that gives rise to both
financial asset of one entity and a financial liability or equity
instrument of another entity
...

to exchange financial assets/ liabilities with another entity >> potentially
favorable
an equity instrument of another entity

Financial Liability

IAS 32 - Financial Instrument : Presentation

1

to deliver cash or another financial asset to another entity
...
Physical assets >> inventories, PPE, ROUA, intangible assets (which have their
own IAS)
2
...
Liabilities (or) assets that are not contractual in nature
...


The two elements must be separately recognized in SOFP
...


IAS 32 - Financial Instrument : Presentation

2

Liability
element

= PV of future cash outflow
= Interest + Principal
= (Sale proceeds* legal rate%* annuity factor of effective rate) +
(Sale proceeds* discount factor of the last year’s effective rate)

Equity element

= Sale proceeds - Liability element

DR >> Cash (Sale proceeds amount)
CR >> Financial Liability
CR >> Equity

πŸ’Œ Step 2 - Allocate Issue Cost
πŸ’Œ Step 3 - Subsequent Measurement
Plus (+) or Minus (-)

The equity element is not remeasured at subsequent period
Title: ACCA Part-2 (F7) IAS 32 _ Financial Instrument _ Presentation
Description: A concise summary of IAS 32 – Financial Instruments (Presentation) for ACCA Part-2 F7 Financial Reporting. Includes formulas, practical ways to remember them, and easy-to-understand notes. Ideal for exam preparation and mastering the presentation of financial instruments.