IFRS 7.20 requires items of income, expense and gains and losses to be disclosed. This disclosure requirement encompasses items of income, expense and gains and losses that arise on remeasurement to fair value. Therefore, an entity provides disclosures of fair value changes, distinguishing between changes that are recognised in profit or loss and changes that are recognised in equity. Further breakdown is provided of changes that relate to:
(a) AFS assets, showing separately the amount of gain or loss recognised directly in equity during the period and the amount that was removed from equity and recognised in profit or loss for the period;
(b) financial assets or financial liabilities at fair value through profit or loss, showing separately those fair value changes on financial assets or financial liabilities (i) designated as such upon initial recognition and (ii) classified as held for trading in accordance with IAS 39; and
(c) hedging instruments.
IFRS 7 neither requires nor prohibits disclosure of components of the change in fair value by the way items are classified for internal purposes. For example, an entity may choose to disclose separately the change in fair value of those derivatives that in accordance with IAS 39 it categorises as held for trading, but the entity classifies as part of risk management activities outside the trading portfolio.
In addition, IFRS 7.8 requires disclosure of the carrying amounts of financial assets or financial liabilities at fair value through profit or loss, showing separately: (i) those designated as such upon initial recognition and (ii) those held for trading in accordance with IAS 39.
G.2 IAS 39 and IAS 7 Hedge accounting: cash flow statements
How should cash flows arising from hedging instruments be classified in cash flow statements?
Cash flows arising from hedging instruments are classified as operating, investing or financing activities, on the basis of the classification of the cash flows arising from the hedged item. While the terminology in IAS 7 has not been updated to reflect IAS 39, the classification of cash flows arising from hedging instruments in the cash flow statement should be consistent with the classification of these instruments as hedging instruments under IAS 39.
