ICAEW.com works better with JavaScript enabled.

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.

Revised December 2003. Effective 1 January 2005.

Become a Financial Reporting Faculty member

Find out more about the benefits of membership and joining details.

Join now

Contents

Free to view

Financial Reporting Faculty members only

Looking for real life examples?

Financial Reporting Faculty members get free access to Company Reporting’s CR service. Company Reporting are a leading research and benchmarking service on IFRS reporting practices.

Faculty membership gives you access to a range of other resources, including the hidden premium content on this page.

Synopsis

IAS 32 classifies financial instruments into:

  • Financial assets
  • Financial liabilities
  • 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.

Which version of the standard?

'Which version of the standard?' is only available to members of the Financial Reporting Faculty. Please note that to access electronic versions of IFRS through the links in these standard trackers you need to have first logged into eIFRS.

Annual period starts
Effective version of standard
Notes on amendments 
On or after 1 January 2023 IAS 32 2021 Issued Standards
Includes amendments 1,2, 3, 4* and 5*
1 January 2019 – 31 December 2022
IAS 32 2020 Required Standards
Includes amendments 1 - 3
1 January 2018 – 31 December 2018 IAS 32 2018 Required Standards
Includes amendments 1 and 2

*Not UK endorsed as at 23 June 2021. Read more on UK endorsement of IFRS standards.  Not EU endorsed as at 23 June 2021. Read more on EU endorsement of IFRS standards.

The Required Standards book for a particular year assumes that there is no early application of issued but not yet effective IFRSs; The Issued Standards book assumes early application of all issued IFRSs.

For the latest version of the standard, and where the amendments are to be adopted early, refer to IAS 32 2021 Issued Standards.

Recent amendments

Full access to details of all the amendments is only available to Financial Reporting Faculty members. Find out how to join the faculty.

1. IFRS 9 amendment to IAS 32

Effective for annual periods beginning on or after 1 January 2018. Earlier application is permitted.

As a result of the issue of IFRS 9, IAS 32 is amended to reflect the requirements of IFRS 9 rather than IAS 39.

2. IFRS 15 Revenue from Contracts with Customers amendments to IAS 32

Effective for annual periods beginning on or after 1 January 2017. Earlier application is permitted.

As a result of the issue of IFRS 15, the application guidance of IAS 32 is amended to refer to the requirements of IFRS 15 when identifying a financial asset / liability.

3. IFRS 16 Leases amendment to IAS 32

To be applied to periods beginning on or after 1 January 2019. Earlier adoption is permitted.

The application guidance of IAS 32 is amended to IFRS 16 requirements rather than IAS 17 requirements.

 

 
4. IFRS 17 Insurance Contracts amendment to IAS 28*

 To be applied to periods beginning on or after 1 January 2023 (originally 2021, subsequently deferred). Earlier adoption is permitted.

IAS 32 is amended to:

5. Amendments to IFRS 17 - amendment to IAS 32 *

To be applied to periods beginning on or after 1 January 2023.  Earlier adoption is permitted. 

The scope paragraph of IAS 32 is amended to:

  • Exclude investment contracts with discretionary participation features that are within the scope of IFRS 17.
  • Include:

    - Insurance contracts that meet the definition of financial guarantee contracts

    - Certain rights and obligations arising under insurance contracts.

*Not UK endorsed as at 23 June 2021. Read more on UK endorsement of IFRS standards. Not EU endorsed as at 23 June 2021. Read more on EU endorsement of IFRS standards.

The following interpretations refer to IAS 32

Current proposals

  1. The IASB is engaged in a research project to investigate potential improvements to the classification of liabilities and equity and the presentation and disclosure requirements for financial instruments with the characteristics of equity regardless of whether they are classified as equity or liabilities. A discussion paper was issued in June 2018 and the next stage is expected to be an exposure draft.

Other resources 

eBooks:

This page was last updated 23 June 2021