Maturity analysis

Learning objectives

• Explain that the maturity analysis covers undiscounted contractual cash flows, separately for non-derivative and derivative financial liabilities.L2
• Calculate the totals by time band and the difference between undiscounted contractual cash flows and the carrying amount.L3

Normative references

• IFRS 7 §39The entity discloses a maturity analysis of the remaining contractual maturities of non-derivative financial liabilities (including financial guarantee contracts issued), a maturity analysis of derivative financial liabilities including remaining contractual maturities when these are essential for an understanding of the timing of the cash flows, and a description of how it manages the resulting liquidity risk; the number of time bands is a matter of judgement (B11).
• IFRS 7 §B11DThe amounts in the maturity analysis are the undiscounted contractual cash flows (for example gross lease liabilities, prices specified in forward agreements to purchase financial assets, net or gross amounts for swaps depending on the settlement method, gross loan commitments); they differ from the discounted amounts in the statement of financial position, and a variable amount is determined by reference to the conditions existing at the end of the reporting period.

Original summaries of the paragraphs (reference register), never a quotation of the standard.

3 questions

• Cèdre SA has two non-derivative financial liabilities at 31 December: trade payables of {trade_payables}, payable in three months, and a loan of {loan_principal}, repayable in two years, with contractual interest of {annual_interest} paid at the end of each year. Total carrying amount of the two liabilities: {carrying_amount}. Prepare the maturity analysis in undiscounted contractual cash flows: total of the "less than one year" bucket, total of the "one to two years" bucket, then the difference between the total of the flows and the carrying amount.L3
• A working paper comments on the maturity analysis of a company's financial liabilities. Which of its sentences is wrong?L2
• Hélios SA's non-derivative financial liabilities represent 4,500,000 of undiscounted contractual cash flows, of which 3,960,000, or 88%, fall due within 90 days. The draft notes propose two buckets: "less than five years" and "more than five years" (case facts). Write a short judgement note assessing this choice of buckets, distinguishing rule, case facts and professional judgement.L3