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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.

30 minNot started

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.

In this lesson

Original teaching content: it paraphrases the standard without reproducing it and does not replace the official text.

Contents — IAS 32 — Financial Instruments: Presentation

  1. 1 · Not startedScope and definitions0 / 2 lessons
  2. 2 · Not startedClassification: financial liability or equity0 / 3 lessons
  3. 3 · Not startedPuttable instruments and special cases0 / 2 lessons
  4. 4 · Not startedCompound financial instruments0 / 2 lessons
  5. 5 · Not startedTreasury shares, distributions and transaction costs0 / 2 lessons
  6. 6 · Not startedOffsetting of financial assets and liabilities0 / 1 lesson
  7. 7 · Not startedLinks with other standards and proposals0 / 0 lessons