IFRS 9 Financial Instruments

A financial asset is defined as any asset that is: –

Cash; – 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 favourable to the entity.

 

– An equity instrument of another entity; – A contract that will or may be settled in the entity’s own equity instruments and is: – A non-derivative for which the entity is or may be obliged to receive a variable number of the entity’s own equity instruments; or – 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.

 

A financial liability is defined as any liability that is: – 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 unfavourable to the entity. – A contract that will or may be settled in the entity’s own equity instruments and is: – A non-derivative for which the entity is or may be obliged to deliver a variable number of the entity’s own equity instruments; or – 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. For this purpose, the entity’s own equity instruments do not include certain instruments as set out above in the equivalent part of the definition of financial assets.

Initial measurement At initial recognition, an entity shall measure a financial liability at its fair value minus, in the case of a financial liability not at fair value through profit or loss, transaction costs that are directly attributable to the issue of the financial liability. Subsequent measurement After initial recognition, an entity shall measure a financial liability in accordance with IFRS 9.4.2.1–4.2.2. An entity shall apply the hedge accounting requirements in paragraphs IFRS 9.6.5.8–6.5.14 to a financial liability that is designated as a hedged item.

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