APPENDIX B
Accounting Standards for Financial Instruments
The main ingredients of IAS 39 on Financial Instruments: Measurement and Recognition are as follows.
FINANCIAL INSTRUMENTS
A financial instrument is any contract that gives rise to a financial asset of one entity and a financial liability or equity instrument of another entity.
Financial Asset
Examples of financial assets include the following:
- Cash.
- Equity instrument of another entity.
- A contractual right
- To receive cash or another financial asset from another entity.
- To exchange financial assets or financial liabilities with another entity under conditions that are, potentially favorable to the entity.
- A contract that will or may be settled in the entity’s own equity instruments and is
- A non-derivative resulting in receiving a variable number of the entity’s own equity instruments.
- A derivative that will or may be settled other than by the exchange of a fixed amount of cash or another financial asset for a fixed number of the entity’s own equity instruments.
Financial Liability
A financial liability can be described in one of two ways:
1. A contractual obligation
- To deliver cash or another financial asset to another entity.
- To exchange financial assets or financial liabilities with another entity under conditions that are, potentially unfavorable to the entity.
2. A contract that will or may be settled in the entity’s own equity instruments and is
- A non-derivative resulting in delivering a variable number of the ...
