38) Technical - What is a Financial Instrument as per IAS 32?

Wednesday, September 16, 2009

Hint:

IAS 32 - Financial Instruments : Presentation


Financial instrument:

  • It's a contract...
  • that gives rise to...
  • "Financial Asset" of one entity and...
  • "Financial Liability" or "Equity Instrument" of other entity

where...


"Financial Assets" are.....

  • Cash,
  • "Equity Instrument" of another entity,
  • "Contractual Right" to.....
    - receive cash or another "Financial Asset"
    - exchange "Financial Assets/Liabilities" under potentially favorable conditions


"Financial Liability" is contractual obligation to...

  • deliver cash or another "Financial Asset"
  • exchange "Financial Assets/Liabilities"
  • under potentially favorable conditions


"Equity Instrument" refers to...

  • Any contract...
  • that evidences residual interest
  • in the asset of an entity
  • after deducting all of its liabilities

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