Chapter 9

Here are the definitions of the financial terms you listed:

1. Financial Instrument

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

2. Financial Asset

Any asset that is:

• Cash

• An equity instrument of another entity

• A contractual right to receive cash or another financial asset

• A contractual right to exchange financial instruments under favorable conditions

3. Financial Liability

A contractual obligation to:

• Deliver cash or another financial asset

• Exchange financial instruments under unfavorable conditions

4. Equity Instrument

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

5. Cash and Cash Equivalents

Cash on hand, demand deposits, and short-term, highly liquid investments that are readily convertible to cash and subject to insignificant risk of changes in value.

6. Receivables

Amounts owed to an entity by customers or other parties, typically from sales of goods or services.

7. Investments in Equity or Debt Instruments of Other Entities

Financial assets that represent ownership (equity) or lending (debt) in another company.

8. Sinking Fund and Other Long-Term Funds

Funds set aside for specific long-term purposes, such as debt repayment.

9. Debt Instrument

A financial instrument that represents a borrowing arrangement, such as bonds or loans.

10. Debt Security

A negotiable financial instrument representing a creditor relationship, such as bonds or treasury bills.

11. Equity Instrument (Repeated; see definition in #4)

12. Equity Securities

Shares of stock or other ownership interests in a company.

13. Advances to Suppliers

Payments made to suppliers before receiving goods or services.

14. Statutory Requirements

Legal obligations imposed by regulations or laws.

15. Commodity Contracts

Contracts to buy or sell commodities at a future date, often traded on exchanges.

16. Classification of Financial Assets

Financial assets are classified based on business models and contractual cash flow characteristics.

17. Basis of Classification

Financial assets are classified at:

• Amortized Cost

• Fair Value Through Other Comprehensive Income (FVOCI)

• Fair Value Through Profit or Loss (FVTPL)

18. Classification at Amortized Cost

Assets held to collect contractual cash flows, measured at amortized cost.

19. Classification at Fair Value Through Other Comprehensive Income (FVOCI)

Assets where cash flows include principal and interest, and the business model involves collecting and selling them.

20. Classification at Fair Value Through Profit or Loss (FVTPL)

Assets that do not qualify for amortized cost or FVOCI, measured at fair value with gains/losses recognized in profit or loss.

21. Investments and Equity Instruments at FVOCI

Investments in equity instruments designated to be measured at fair value with changes recorded in other comprehensive income.

22. Option to Designate a Financial Asset at FVTPL

Entities may choose to measure certain assets at fair value through profit or loss to eliminate accounting mismatches.

23. Business Model

How a company manages its financial assets to generate cash flows.

24. Hold to Collect

A business model where assets are held to collect contractual cash flows.

25. Hold to Collect and Sell

A business model where assets are managed to collect cash flows and for sale.

26. Matter of Fact

A statement based on objective evidence rather than opinion.

27. Held for Trading Security

A financial asset acquired for short-term profit through active buying and selling.

28. Derivative

A financial instrument deriving its value from an underlying asset, index, or rate.

29. Solely Payments of Principal and Interest (SPPI)

A test to determine whether a financial asset’s cash flows consist only of principal and interest payments.

30. Principal

The original amount of a loan or financial asset.

31. Interest

The cost of borrowing money, typically expressed as a percentage.

32. Fair Value Through Profit and Loss (FVTPL) (Same as #20)

33. Fair Value

The price an asset would sell for in an orderly transaction between market participants.

34. Transaction Costs

Costs incurred to acquire or dispose of a financial asset or liability.

35. Transaction Price

The price agreed upon in a transaction.

36. Going Concern

The assumption that a business will continue operating for the foreseeable future.

37. Mark-to-Market Accounting

Valuing assets and liabilities based on current market prices.

38. Unit of Account

The level at which an asset or liability is measured.

39. Principal Market

The market with the highest volume and level of activity for a given asset or liability.

40. Current Market Conditions

Economic and financial conditions affecting asset values and business operations.

41. Most Advantageous Market

The market that maximizes the price received for selling an asset or minimizes the cost of liability transfer.

42. Transport Costs

Costs incurred to bring an asset to its principal or most advantageous market.

43. Market Approach

A valuation method based on market prices of similar assets.

44. Cost Approach

A valuation method based on the cost to replace an asset.

45. Income Approach

A valuation method based on expected future cash flows.

46. Bid Price

The highest price a buyer is willing to pay for an asset.

47. Ask Price

The lowest price a seller is willing to accept.

48. Active Market

A market with frequent and regular transactions for an asset.

49. Level Inputs

Inputs used to determine fair value, classified into three levels:

50. Level 1 Inputs

Observable market prices for identical assets.

51. Level 2 Inputs

Inputs based on observable but not directly quoted prices.

52. Level 3 Inputs

Unobservable inputs based on estimates and models.

53. FVOCI Mandatory

Certain financial assets must be measured at FVOCI based on their characteristics.

54. FVOCI Election

An option to measure certain equity investments at FVOCI.

55. Investments

Assets acquired to generate income or capital appreciation.

56. Held for Trading Securities (Same as #27)

57. Investment in Equity Securities Measured at FVOCI

Equity investments recorded at fair value with gains/losses in other comprehensive income.

58. Investment in Debt Securities Mandatorily Measured at FVOCI

Debt securities that must be measured at FVOCI due to their business model and cash flow characteristics.

59. Investment in Debt Securities Measured at Amortized Cost

Debt investments held to collect contractual cash flows, measured at amortized cost.

60. Investment Property

Real estate held for rental income or capital appreciation.

61. Investment in Associate

Ownership in another entity where the investor has significant influence.

62. Investment in Subsidiary

Ownership of more than 50% of another entity, giving control.

63. Investment in Joint Venture

A business arrangement where two or more parties have joint control.

64. Investments in Long-Term Funds

Funds invested for long-term purposes.

65. Contingency or Insurance Fund and Similar Reserves

Funds set aside for unforeseen events or insurance claims.

66. Certain Derivatives Designated as Hedging Instruments

Derivatives used to offset risks in hedging strategies.

67. Financial Statement Presentation

The format and structure of financial statements according to accounting standards.

Let me know if you need further clarifications!