Financial Instruments Flashcards
What is financial instrument?
Any contract that gives rise to financial asset of one entity and financial liabiltiy or equity instrument of another entity
What is a financial asset?
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
Physical assets ,right of use asset, intangible asset are FA?
No they are not FA as they do no give present right to receive cash or another FA.
Are Prepaid expenses,deferred revenue, most warraty obligations FA?
No they are not FA as the future economic benefit is goods or services rather than FA
Are Perpetual debt instruments FA?
Yes they are FA as the holder has right to receive payments on account of interest at fixed dates into indefinite future.
What is a Equity Instruments?
No contractual obligation to deliver cash or FA to exchange FA or FL with another entity