IAS 32Chapter 1Lesson 1
What is a financial instrument? One contract, two points of view
Step 1 of 6Learning objectives
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A financial instrument is a contract that creates a financial asset for one party and a financial liability or an equity instrument for the other; the asset is assessed on the holder's side, the liability on the issuer's side, and the contract requirement excludes taxes.
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Learning objectives
- Explain that a financial instrument is a contract that creates a financial asset for one entity and a financial liability or an equity instrument for another.
- Distinguish the financial asset (holder's point of view) from the financial liability (issuer's point of view) for the same contract.
- Determine, from the terms of an issued contract, whether it creates a contractual obligation to deliver cash or another financial asset.
- Identify, among an entity's obligations, those that are contractual and those that are not, such as a tax.