Financial Instruments Flashcards

1
Q

What is financial instrument?

A

Any contract that gives rise to financial asset of one entity and financial liabiltiy or equity instrument of another entity

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2
Q

What is a financial asset?

A

a. Cash
b. Equity instrument of another entity
c. Contractual right to cash or FA OR exchange FA/FL for potential favor to entity
d. non-derivative entity own equity variable number

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3
Q

Physical assets ,right of use asset, intangible asset are FA?

A

No they are not FA as they do no give present right to receive cash or another FA.

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4
Q

Are Prepaid expenses,deferred revenue, most warraty obligations FA?

A

No they are not FA as the future economic benefit is goods or services rather than FA

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5
Q

Are Perpetual debt instruments FA?

A

Yes they are FA as the holder has right to receive payments on account of interest at fixed dates into indefinite future.

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6
Q

What is a Equity Instruments?

A

No contractual obligation to deliver cash or FA to exchange FA or FL with another entity

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7
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8
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9
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