Conceptual Framework & Accounting Standards

This flashcard set covers essential vocabulary and definitions related to financial instruments, measurement, and relevant accounting standards.

Financial Instruments

Any contract that gives rise to both a financial asset of one entity and a financial liability or equity instrument of another entity.

Financial Asset

Any asset that is cash, an equity instrument of another entity, or a contractual right to receive cash or another financial asset from another entity.

Financial Liability

Any liability that is a contractual obligation to deliver cash or another financial asset to another entity or to exchange financial instruments with another entity under unfavorable conditions.

Equity Instrument

Any contract that evidences a residual interest in the assets of an entity after deducting all of its liabilities.

Fair Value

The price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date.

Amortized Cost

The amount at which a financial asset or financial liability is measured at initial recognition minus principal repayments, plus or minus the cumulative amortization of any difference between that initial amount and the maturity amount.

Derecognition

The removal of a previously recognized financial instrument from an entity's statement of financial position.

Contractual Cash Flows

Cash flows that are solely payments of principal and interest on the principal amount outstanding.

PFRS 9

A standard that deals with the recognition and measurement of financial instruments, including rules on classification, measurement, and impairment.

Compound Financial Instruments

Instruments that contain both a liability and an equity element.