CFM21140 - Accounting for corporate finance: key concepts: financial instruments that are ‘outside the scope’
What financial instruments are outside the scope of IAS 32 and IAS 39 or IFRS 9
IAS 32, IAS 39 and IFRS 7, and IFRS 9 apply to all financial instruments, with the following principal exceptions:
| Interests in subsidiaries, associates, and joint ventures | See IFRS 10 (‘Consolidated Financial Statements’), IAS 27 (‘Separate Financial Statements’), IAS 28 (‘Investments in Associates and Joint Ventures’), unless these state that IAS 39 or IFRS 9 applies or can apply, in which the case the requirements of IAS 32 and IFRS 7 also apply. |
|---|---|
| Employee benefits plans | See IAS 19 (‘Employee Benefits’) |
| Leases | See IFRS 16 (‘Leases’) for periods beginning on or after 1 January 2019 or IAS 17(‘Leases’) for earlier periods. However, IAS39 or IFRS 9 applies to: (1) lessor’s lease receivables with respect to derecognition and impairment provisions; (2) lessees finance lease payables with respect to derecognition provisions; and (3) derivatives embedded in leases. (4) In respect of leases, the disclosure provisions of IAS 32 or IFRS 7 apply as well as those in IAS/IFRS 16 |
| Business combinations | IAS 39 or IFRS 9 does not apply to contracts between an acquirer and a vendor to buy or sell an acquiree at a future date. |
| Insurance contracts, defined at IFRS 4 | IAS 39 or IFRS 9 applies, however, to derivatives embedded in insurance contracts unless they are themselves within the scope of IFRS 4. If IAS 39 or IFRS 9 applies, then so do IAS 32 and IFRS 7. |
| Financial guarantee contracts | Excluded if falling within scope of IFRS 4. Included if linked to an ‘underlying’, for example, credit derivatives. Disclosure provisions in IAS 32 or IFRS 7 apply other than to those contracts falling within IFRS 4. |
| Financial instruments, contracts and obligations under share-based payment transactions under IFRS 2 | Except (a) where IAS 32 applies to treasury shares that are part of a share-based payment arrangement (see CFM21220) and (b) those classed as derivatives. |
| Reimbursement of amounts for which the entity recognises a provision in accordance with IAS 37 |
For FRS 101 users the scope exclusions noted above also apply.
FRS 102: Financial Instruments that are outside the scope of Sections 11 and 12. For users of FRS 102 similar scope exclusions apply. A full list of exclusions under FRS 102 is provided in paragraph 11.7 of FRS102.