ACCA Strategic Professional · Strategic Business Reporting (International) · Financial instruments
Kappa Ltd has a liability of $10 million repayable in 2 years, $6 million due in 5 years, and a derivative liability. For IFRS 7 liquidity risk disclosures, which approach is correct for the maturity analysis of non-derivative financial liabilities?
The maturity analysis under IFRS 7 must show remaining contractual maturities using undiscounted contractual cash flows, including interest payments. It is not based on discounted carrying amounts or fair values, and it covers all periods, not merely the next twelve months.
- AShow the carrying amounts discounted at the effective interest rate
- BShow remaining contractual maturities using undiscounted contractual cash flowsCorrect
- CShow only liabilities due within 12 months
- DShow fair values of the liabilities at the reporting date
Explanation
IFRS 7 requires a maturity analysis of financial liabilities showing remaining contractual maturities, based on undiscounted contractual cash flows including interest. Discounted carrying amounts or fair values would not meet this requirement, and liabilities beyond 12 months are also included.
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