The financial asset, seen from the holder's side

Learning objectives

• Explain that a financial asset is assessed from the holder's perspective and give common examples (cash, receivables, investments).L1
• Distinguish, in a list of items, those that are financial assets from those that are not.L1

Normative references

• IAS 32 §11A financial instrument is a contract that gives rise to a financial asset of one entity and a financial liability or equity instrument of another entity. A financial asset includes cash, an equity instrument of another entity, a contractual right to receive cash or another financial asset or to exchange financial assets or liabilities under potentially favourable conditions, and certain contracts settled in own equity instruments. A financial liability includes a contractual obligation to deliver cash or another financial asset or to exchange financial assets or liabilities under potentially unfavourable conditions, and certain contracts settled in own equity instruments (a variable number of instruments, or a derivative other than a fixed-for-fixed exchange); rights, options or warrants to acquire a fixed number of own equity instruments for a fixed amount of any currency are equity if they are offered pro rata to all existing owners of the same class of non-derivative equity instruments. An equity instrument is a contract that evidences a residual interest in the assets after deducting all liabilities. The paragraph also defines a puttable instrument.

Original summaries of the paragraphs (reference register), never a quotation of the standard.

3 questions

• Omega SA has to pay 40,000 to a supplier for a delivery already received. In Omega's accounts, this payable is a financial asset, since the contract relates to cash.L1
• Élodie SA invests 100,000 in bonds issued by another company. How is this investment classified in Élodie's accounts?L1
• Which statements about the financial asset are correct? Several answers are possible.L1