Objective: importance of instruments and risks

Learning objectives

• Explain the two parts of the objective: the significance of financial instruments for financial position and performance, and the nature and extent of risks and how those risks are managed.L1
• Identify, among the disclosures in a set of notes, those that address the financial position and performance part or the risks part.L1

Normative references

• IFRS 7 §1Objective: to require disclosures that enable users to evaluate, first, the significance of financial instruments for the entity's financial position and performance and, second, the nature and extent of risks arising from those instruments during the period and at the end of the reporting period, and how they are managed; para. 2 states that these principles complement those of IAS 32 and IFRS 9.

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

4 questions

• IFRS 7 aims to enable users to assess the significance of financial instruments for the entity's financial position and performance, and the nature and extent of the risks arising from them and how the entity manages them.L1
• What is the objective of IFRS 7?L1
• A colleague summarises the purpose of IFRS 7 for a newcomer. Which of the colleague's sentences is wrong?L1
• A consolidation manager prepares notes on the effect of IFRS 18 on IFRS 7 for a period beginning on 1 January 2026, without early application. Which of his sentences is wrong?L3