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Appendix A Defined terms

United Kingdom

Original text. Later amendments are not shown.

This appendix is an integral part of the IFRS.

credit risk

  • The risk that one party to a financial instrument will cause a financial loss for the other party by failing to discharge an obligation.

    • currency risk

  • The risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in foreign exchange rates.

    • interest rate risk

  • The risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market interest rates.

    • liquidity risk

  • The risk that an entity will encounter difficulty in meeting obligations associated with financial liabilities.

    • loans payable

  • Loans payable are financial liabilities, other than short-term trade payables on normal credit terms.

    • market risk

  • The risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market prices. Market risk comprises three types of risk: currency risk, interest rate risk and other price risk.

    • other price risk

  • The risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market prices (other than those arising from interest rate risk or currency risk), whether those changes are caused by factors specific to the individual financial instrument or its issuer, or factors affecting all similar financial instruments traded in the market.

    • past due

  • A financial asset is past due when a counterparty has failed to make a payment when contractually due.

    • The following terms are defined in paragraph 11 of IAS 32 or paragraph 9 of IAS 39 and are used in the IFRS with the meaning specified in IAS 32 and IAS 39.

    • amortised cost of a financial asset or financial liability

    • available-for-sale financial assets

    • derecognition

    • derivative

    • effective interest method

    • equity instrument

    • fair value

    • financial asset

    • financial instrument

    • financial liability

    • financial asset or financial liability at fair value through profit or loss

    • financial asset or financial liability held for trading

    • forecast transaction

    • hedging instrument

    • held-to-maturity investments

    • loans and receivables

    • regular way purchase or sale