Financi
al
Description and classification
A financial instrument will be a financial asset in one entity’s records and a
financial liability or equity instrument (shares) in another entity’s records
The instrument is brought about by a valid contract between the parties
Financial Assets
Has monetary substance i.e. can be converted to cash
It is a right to receive cash
Can be cash, receivable, equity or profit from exchanges
Classification and Recognition
Either an equity or debt instrument (shares or a form of debt such as a bonds)
The business model determines classification and subsequent measurement:
No
Asset held for No Equity
contractual instrument?
cash flows
Yes
Yes
No
Cash solely Equity instrument
in fair value
capital and
through OCI
interest
Yes
Fair value via P/L
Amortised cost. (Main Fair value via OCI (intention to
(intention to trade asset)
intention to hold asset) hold and sell later)
al
Description and classification
A financial instrument will be a financial asset in one entity’s records and a
financial liability or equity instrument (shares) in another entity’s records
The instrument is brought about by a valid contract between the parties
Financial Assets
Has monetary substance i.e. can be converted to cash
It is a right to receive cash
Can be cash, receivable, equity or profit from exchanges
Classification and Recognition
Either an equity or debt instrument (shares or a form of debt such as a bonds)
The business model determines classification and subsequent measurement:
No
Asset held for No Equity
contractual instrument?
cash flows
Yes
Yes
No
Cash solely Equity instrument
in fair value
capital and
through OCI
interest
Yes
Fair value via P/L
Amortised cost. (Main Fair value via OCI (intention to
(intention to trade asset)
intention to hold asset) hold and sell later)
