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CA Final · Financial Reporting · Financial Instruments: Disclosures

Kaveri Pharma Ltd presents a table of its credit risk exposures and separately describes in words how management monitors and manages that risk. The auditor asks why both are needed. Under Ind AS 107, what is the purpose of providing qualitative disclosures in the context of quantitative disclosures on risks?

Qualitative disclosures given alongside quantitative ones enable users to link related disclosures and form an overall picture of the nature and extent of risks from financial instruments. Their interaction helps users evaluate the entity's exposure to risks better; it does not replace the numerical disclosures.

  1. AIt lets the entity omit the numerical disclosures when the narrative is detailed
  2. BIt enables users to link related disclosures and form an overall picture of the nature and extent of risks, better evaluating exposureCorrect
  3. CIt is required only for entities with listed debt instruments
  4. DIt replaces the need to disclose the entity's risk management objectives

Explanation

Paragraph 32A says qualitative disclosures in the context of quantitative ones let users link related disclosures and form an overall picture of the nature and extent of risks. The interaction improves users' evaluation of exposure. It does not make numbers optional.

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