FINANCIAL INSTRUMENTS

Financial Instrument

Is any contract that gives rise to 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

• A contractual right

  1. To receive cash or another financial asset from another entity or

  2. To exchange financial assets or liabilities with another entity under conditions that are potentially favourable to the entity

Financial Liability

A contractual obligation

• To deliver cash or another financial asset to another entity

• To exchange financial assets or financial liabilities with another entity under conditions that are potentially unfavourable to the entity

Equity instrument

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

Fair value

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

Effective interest method

Held for trading