CA Final · Financial Reporting · Financial Instruments: Disclosures
Mehta Textiles Ltd presents qualitative narrative on how its management handles credit risk, liquidity risk and market risk, and also gives numerical data such as exposure amounts and sensitivity figures. The CFO asks why both kinds of information are required together. Which statement is consistent with Ind AS 107 (para 32A)?
Ind AS 107 para 32A says qualitative disclosures in the context of quantitative ones enable users to link related disclosures and form an overall picture of the nature and extent of risks. Their interaction improves evaluation of the entity's exposure, so neither type replaces the other.
- AQualitative disclosures replace quantitative disclosures where the narrative is detailed enough
- BQuantitative disclosures alone are sufficient because numbers are objective
- CQualitative disclosures are given in the context of quantitative disclosures so users can link related information and form an overall picture of the nature and extent of risksCorrect
- DQualitative disclosures are needed only by first-time adopters of Ind AS
Explanation
Para 32A states that qualitative disclosures given in the context of quantitative disclosures let users link related disclosures and form an overall picture of risks. The interaction between the two helps users evaluate risk exposure. Treating one as a substitute for the other is therefore wrong.
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