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Commission Regulation (EC) No
2237/2004 of 29 December 2004 amending Regulation (EC) No 1725/2003
adopting certain international accounting standards in accordance
with Regulation (EC) No 1606/2002 of the European Parliament and of
the Council, as regards IAS No 32 and IFRIC 1
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Objective
1. The objective of
this Standard is to enhance financial statement users’
understanding of the significance of financial instruments to
an entity’s financial position, performance and cash flows.
2. This Standard
contains requirements for the presentation of financial
instruments and identifies the information that should be
disclosed about them. The presentation requirements apply to
the classification of financial instruments, from the
perspective of the issuer, into financial assets, financial
liabilities and equity instruments; the classification of
related interest, dividends, losses and gains; and the
circumstances in which financial assets and financial
liabilities should be offset. The Standard requires disclosure
of information about factors that affect the amount, timing
and certainty of an entity’s future cash flows relating to
financial instruments and the accounting policies applied to
those instruments. This Standard also requires disclosure of
information about the nature and extent of an entity’s use
of financial instruments, the business purposes they serve,
the risks associated with them, and management’s policies
for controlling those risks.
3. The principles in
this Standard complement the principles for recognising and
measuring financial assets and financial liabilities in IAS 39
Financial Instruments: Recognition and Measurement.
Scope
4. This Standard
shall be applied by all entities to all types of financial
instruments except:
(a) those interests
in subsidiaries, associates and joint ventures that
are accounted for under IAS 27 Consolidated and Separate
Financial Statements, IAS 28 Investments in Associates
or IAS 31 Interests in Joint Ventures. However,
entities shall apply this Standard to an interest in a
subsidiary, associate or joint venture that according to
IAS 27, IAS 28 or IAS 31 is accounted for under IAS 39
Financial Instruments: Recognition and Measurement. In
these cases, entities shall apply the disclosure
requirements in IAS 27, IAS 28 and IAS 31 in
addition to those in this Standard. Entities
shall also apply this Standard to all derivatives
on interests in subsidiaries, associates or joint
ventures.
(b) employers’
rights and obligations under employee benefit plans,
to which IAS 19 Employee Benefits applies.
(c) contracts for contingent
consideration in a business combination (see IFRS 3
Business Combinations). This exemption applies only to
the acquirer.
(d) insurance contracts as defined
in IFRS 4 Insurance Contracts. However, this Standard
applies to derivatives that are embedded in insurance
contracts if IAS 39 requires the entity to account for
them separately.
(e) financial instruments that are
within the scope of IFRS 4 because they contain a
discretionary participation feature. The issuer of these
instruments is exempt from applying to these features
paragraphs 15-32 and AG25-AG35 of this Standard
regarding the distinction between financial liabilities
and equity instruments. However, these instruments are
subject to all other requirements of this Standard.
Furthermore, this Standard applies to derivatives that
are embedded in these instruments (see IAS 39).
(f) financial instruments, contracts and obligations under
share- based payment transactions to which IFRS 2
Share-based Payment applies, except for
(i)
contracts within the scope of paragraphs 8-10 of
this Standard, to which this Standard applies,
(ii)
paragraphs 33 and 34 of this Standard, which shall
be applied to treasury shares purchased, sold,
issued or cancelled in connection with employee
share option plans, employee share purchase plans,
and all other share-based payment arrangements.
5. This Standard
applies to recognised and unrecognised financial instruments.
Recognised financial instruments include equity instruments
issued by the entity and financial assets and financial
liabilities that are within the scope of IAS 39. Unrecognised
financial instruments include some financial instruments that,
although outside the scope of IAS 39, are within the scope of
this Standard (such as some loan commitments).
6. [deleted]
7. Other Standards
specific to particular types of financial instrument contain
additional presentation and disclosure requirements. For
example, IAS 17 Leases and IAS 26 Accounting and
Reporting by Retirement Benefit Plans incorporate
specific disclosure requirements relating to finance leases
and retirement benefit plan investments, respectively. In
addition, some requirements of other Standards, particularly
IAS 30 Disclosures in the Financial Statements of Banks
and Similar Financial Institutions, apply to financial
instruments.
8. This Standard
shall be applied to those contracts to buy or sell a non-financial
item that can be settled net in cash or another financial
instrument, or by exchanging financial instruments, as if
the contracts were financial instruments, with the
exception of 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.
9. There are various
ways in which a contract to buy or sell a nonfinancial item
can be settled net in cash or another financial instrument or
by exchanging financial instruments. These include:
(a) when the terms
of the contract permit either party to settle it net in cash
or another financial instrument or by exchanging financial
instruments;
(b) when the ability
to settle net in cash or another financial instrument, or by
exchanging financial instruments, is not explicit in the terms
of the contract, but the entity has a practice of settling
similar contracts net in cash or another financial instrument,
or by exchanging financial instruments (whether with the
counterparty, by entering into offsetting contracts or by
selling the contract before its exercise or lapse);
(c) when, for
similar contracts, the entity has a practice of taking
delivery of the underlying and selling it within a short
period after delivery for the purpose of generating a profit
from short-term fluctuations in price or dealer’s margin;
and
(d) when the
non-financial item that is the subject of the contract is
readily convertible to cash.
A contract to which
(b) or (c) applies is not entered into for the purpose of the
receipt or delivery of the non-financial item in accordance
with the entity’s expected purchase, sale or usage
requirements, and, accordingly, is within the scope of this
Standard. Other contracts to which paragraph 8 applies are
evaluated to determine whether they were entered into and
continue to be held for the purpose of the receipt or delivery
of the non-financial item in accordance with the entity’s
expected purchase, sale or usage requirement, and accordingly,
whether they are within the scope of this Standard.
10. A written option
to buy or sell a non-financial item that can be settled net in
cash or another financial instrument, or by exchanging
financial instruments, in accordance with paragraph 9(a) or
(d) is within the scope of this Standard. Such a contract
cannot be entered into for the purpose of the receipt or
delivery of the non-financial item in accordance with the
entity’s expected purchase, sale or usage requirements.
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