Summary
Summary Learning Unit 7: Financial Instruments Summart
- Institution
- University Of South Africa (Unisa)
This summary contains a detailed description of financial instruments IAS32 IFRS 7 and IFRS 9.
[Show more]
1 review
By: nthabi74 • 1 month ago
Content preview
Financial Accounting (FAC3764)SUMMARY of Learning Unit 7
STANDARDS:
- IFRS 7 Financial Instruments
- IAS 32 Financial Instruments: Presentation
- IFRS 9 Financial Instruments: Disclosure
FINANCIAL INSTRUMENTS (IFRS 7, IAS 32 & IFRS 9)
A financial instrument is an item, born from a contract, which will be recognised as a
financial asset by one entity and recognised as either a financial liability or equity by another
entity.
Financial Financial
Asset of one
Financial liability/equity
entity Instrument of another
entiry
, Financial Assets
A financial asset is defined as cash, an equity instrument of another entity, a contractual
right to:
- Receive cash or another financial asset from another entity; or
- Exchange financial assets of financial liabilities with another entity under conditions
that are potentially favourable to the entity; or
- Certain contracts to be settled in the entity’s own equity instruments.
Examples:
Financial Assets Not Financial Assets
Cash Gold
Trade accounts receivables Inventory
Right to receive as many of the entity’s own Prepaid electricity
equity instruments
Right to receive as many of the entity’s own
equity instruments (market value)
FINANCIAL ASSETS: RECOGNITION
Initial recognition – recognised only when the entity becomes party to the contractual provisions
of the instrument.
FINANCIAL ASSETS: CLASSIFICATION
Four Formal
Classifications
Fair value through other Fair value through other
Fair value through profit comprehensive income comprehensive income
Amortised cost (AC)
or loss (FVPL) for debt instruments for equity instruments
(FVOCI-debt) (FVOCI-equity)
Financial Assets is classified by assessing:
- Its contractual cash flow characteristics
- The business model within which the financial asset is managed
The benefits of buying summaries with Stuvia:
Guaranteed quality through customer reviews
Stuvia customers have reviewed more than 700,000 summaries. This how you know that you are buying the best documents.
Quick and easy check-out
You can quickly pay through EFT, credit card or Stuvia-credit for the summaries. There is no membership needed.
Focus on what matters
Your fellow students write the study notes themselves, which is why the documents are always reliable and up-to-date. This ensures you quickly get to the core!
Frequently asked questions
What do I get when I buy this document?
You get a PDF, available immediately after your purchase. The purchased document is accessible anytime, anywhere and indefinitely through your profile.
Satisfaction guarantee: how does it work?
Our satisfaction guarantee ensures that you always find a study document that suits you well. You fill out a form, and our customer service team takes care of the rest.
Who am I buying this summary from?
Stuvia is a marketplace, so you are not buying this document from us, but from seller haaimy04. Stuvia facilitates payment to the seller.
Will I be stuck with a subscription?
No, you only buy this summary for R100,00. You're not tied to anything after your purchase.
Can Stuvia be trusted?
4.6 stars on Google & Trustpilot (+1000 reviews)
62799 documents were sold in the last 30 days
Founded in 2010, the go-to place to buy summaries for 14 years now