Skip to content

CA Final · Financial Reporting · Financial Instruments: Disclosures

Sunrise Textiles Ltd's Ind AS financial statements include both qualitative and quantitative risk disclosures on financial instruments. According to Paragraph 32A of Ind AS 107, what is the main benefit of providing qualitative disclosures in the context of quantitative disclosures?

Paragraph 32A of Ind AS 107 states that qualitative disclosures given alongside quantitative ones help users link related disclosures and form an overall picture of the nature and extent of risks arising from financial instruments. They complement the numbers and do not replace them.

  1. AIt lets users link related disclosures and form an overall picture of the nature and extent of risks from financial instrumentsCorrect
  2. BIt removes the need to give any quantitative risk information
  3. CIt allows the entity to measure financial instruments at cost instead of fair value
  4. DIt replaces the requirement to present a balance sheet

Explanation

Paragraph 32A says qualitative disclosures given in the context of quantitative disclosures enable users to link related disclosures and form an overall picture of risks. The interaction between the two lets users better evaluate the entity's risk exposure. Qualitative disclosures supplement the quantitative ones and do not replace them, so the option removing quantitative information is wrong.

Did you get it right without looking?

One question tells you little. A timed set on Financial Instruments: Disclosures shows your real accuracy, how long you take and where you lose marks.

Practise Financial Instruments: DisclosuresFree diagnostic mock

More Financial Instruments: Disclosures questions