Financial instruments

• Financial asset (FA)


  • Cash
  • Contractual right to receive cash/FA
  • Contract to exchange FA under potentially favourable conditions
  • Equity instrument of another entity
  • Contract that will be settled in entity's own equity instruments
• Financial liability (FL)


  • Contractual obligation to deliver cash
  • Contract to exchange FA under unfavourable conditions
  • Contract that will be settled in equity instruments
• Compound instrument


  Separate debt/equity components
• Debt component


  • PV of principal
  • Periodic interest payments
• Equity component


  Residual interest after deducting debt component
• Recognition (IFRS)


  When party to contractual provisions of instrument
• Derecognition (IFRS 9)


  1. Contractual rights to cash flows expire

  2. FA is transferred (risks/rewards of ownership transferred)
• Derecognition (FL)


  1. Obligation is discharged

  2. Cancelled

  3. Expires
• Classification and measurement (IFRS 9)

  • Fair value through profit or loss (FVTPL)
  • Amortised cost
  • Fair value through other comprehensive income (FVOCI)