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IAS 32Financial Instruments: Presentation

IAS 32Chapter 6Lesson 1

Offsetting: an enforceable right and the intention to settle net

Step 1 of 6Learning objectives

Go deeper+1 point of attention

A financial asset and a financial liability are presented net only if the entity currently has a legally enforceable right to set off and intends either to settle net or to realise the asset and settle the liability simultaneously.

40 minNot started

Learning objectives

  • Explain that offsetting requires a currently enforceable legal right and the intention to settle net or simultaneously.
  • Determine whether a financial asset and a financial liability are presented net.
  • Explain why a right of set-off dependent on a future event does not meet the criterion, and analyse whether it is enforceable in all circumstances.
  • Analyse past practices and documented risk management to assess the intention to settle net, and justify the conclusion.

In this lesson

Original teaching content: it paraphrases the standard without reproducing it and does not replace the official text.

Contents — IAS 32 — Financial Instruments: Presentation

  1. 1 · Not startedScope and definitions0 / 2 lessons
  2. 2 · Not startedClassification: financial liability or equity0 / 3 lessons
  3. 3 · Not startedPuttable instruments and special cases0 / 2 lessons
  4. 4 · Not startedCompound financial instruments0 / 2 lessons
  5. 5 · Not startedTreasury shares, distributions and transaction costs0 / 2 lessons
  6. 6 · Not startedOffsetting of financial assets and liabilities0 / 1 lesson
  7. 7 · Not startedLinks with other standards and proposals0 / 0 lessons