UNIT 5 Accounting & Reporting of Financial instruments
1Q) ACCOUNTING AND REPORTING OF FINANCIAL INSTRUMENTS Definition : Financial instruments means any contract that gives rise to a financial asset to one entity & financial liability / equity instrument to another entity. As the definition of financial instrument indicates that there must be a contractual right / obligation in existence for something to be deemed to be a financial instrument if there is no contractual right / obligation then there is no financial instrument. Financial instruments are classified in to financial asset & financial liability. Financial asset : Financial asset is an asset whose value comes from contractual claim. These assets are frequently traded. Financial asset include the following items : a) Cash b) Equity of another entity c) A contractual right to receive cash / similar from another entity / a potentially f...