Financial Instruments

Question 1

According to IAS 32 financial assets include what?

Answer 1

According to IAS, 32 financial instruments, presentation, financial assets include:

• Cash
• Contractual right to receive cash, e.g. receivables
• Contractual right to exchange, financial assets or liabilities on favourable terms
• An equity instrument in another entity, i.e. an investment

Question 2

Describe the concept of fair presentation

Answer 2

IAS 1, presentation of financial statements, describes a concept of fair presentation. Fair presentation involves:
- Representing faithfully the effect of transactions, other events and conditions; and
- In accordance with the definitions and recognition criteria in the conceptual framework
This is developed by stating that the application of IFRS standards, interpretations and additional disclosures is presumed to result in fair presentation
The conceptual framework uses the description of fair presentation in its discussion of the application of the principal qualitative characteristics of financial information