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IAS 32 Financial Instruments: Presentation

IAS 32 Financial Instruments: Presentation sets out the principles for presenting financial instruments as liabilities or equity and for offsetting financial assets and liabilities.

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IAS 32 classifies financial instruments into financial assets, financial liabilities and equity in accordance with the substance of the arrangement and the definitions of these elements. In certain cases, such as convertible debt, the instrument is split into a liability and equity element. Financial assets and liabilities may only be offset where there is a legally enforceable right to offset and the entity intends to settle on a net basis. Any treasury shares are deducted from equity.

Interest, dividends, losses and gains related to a financial liability are recognised in profit or loss; dividends in relation to equity instruments are recognised directly in equity.

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