Accounting for corporate finance: derivative contracts: FRS 13 disclosure requirements: disclosure of accounting policies
Accounting policy disclosures required under other standards
If an entity’s use of financial instruments has a material impact on its financial statements, it is required to disclose its accounting policies under FRS18 (Accounting policies).
Accounting policy disclosures required under FRS13
FRS13 gives additional guidance as to what the description of accounting policies will typically need to include to comply with FRS 18. These include:
- methods for accounting for each type of derivative used
- bases for recognition/derecognition and measurement (initial and subsequent) of financial assets and liabilities
- recognition and measurement of income and expenses and other gains or losses
- treatment of non-recognised financial assets and liabilities and the way in which provisions for losses on such items are recognised
- offsetting policies.
- if the historic cost accounting model is adopted, the accounting treatment of various items (e.g. the premium on a financial asset) should be given
- where hedging strategies are employed, the standard expects similar disclosures of the detailed policies - in particular the reasons/circumstances and methods of recognition/derecognition and measurement.