Financial instruments - Disclosures: Sweep Issues

Date recorded:

During the preballot draft some Board members questioned whether the requirement to disclose "the effective interest rate on the liability component (excluding any embedded derivatives that are accounted for separately)" provides additional information whose value exceeds the cost of providing it. The full proposed disclosure is:

"If an entity has issued an instrument that contains both a liability and an equity component (see paragraph 28 of IAS 32) and the instrument has multiple embedded derivative features whose values are interdependent (such as a callable convertible debt instrument), it shall disclose the existence of those features and the effective interest rate on the liability component (excluding any embedded derivatives that are accounted for separately)."

A number of Board members questioned what a user would do with this information. The Board agreed to remove this requirement.

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