Financial Instrument Resource | Learn About, Share and Discuss Financial Instrument At Popflock.com




Financial Instrument
Get Financial Instrument essential facts below, , or join the Financial Instrument discussion. Add Financial Instrument to your PopFlock.com topic list for future reference or share this resource on social media.
Financial Instrument

Financial instruments are monetary contracts between parties. They can be created, traded, modified and settled. They can be cash (currency), evidence of an ownership interest in an entity (share), or a contractual right to receive or deliver (e.g., Currency; Debt: bonds, loans; Equity: shares; Derivatives: options, futures, forwards).

International Accounting Standards IAS 32 and 39 define a financial instrument as "any contract that gives rise to a financial asset of one entity and a financial liability or equity instrument of another entity".[1]

Financial instruments may be categorized by "asset class" depending on whether they are equity-based (reflecting ownership of the issuing entity) or debt-based (reflecting a loan the investor has made to the issuing entity). If the instrument is debt it can be further categorized into short-term (less than one year) or long-term. Foreign exchange instruments and transactions are neither debt- nor equity-based and belong in their own category.

Types

Financial instruments can be either cash instruments or derivative instruments:

Some instruments defy categorization into the above matrix, for example repurchase agreements.

Measuring gain or loss

The gain or loss on a financial instrument is as follows:

Instrument Type Categories Measurement Gains and losses
Assets Loans and receivables Amortized costs Net income when asset is derecognized or impaired (foreign exchange and impairment recognized in net income immediately)
Assets Available for sale financial assets Deposit account - fair value Other comprehensive income (impairment recognized in net income immediately)

See also

References

  1. ^ International Accounting Standard (IAS) 32.11
  2. ^ Understanding Derivatives. Federal Reserve Bank of Chicago. Accessed August 2, 2015.

External links


  This article uses material from the Wikipedia page available here. It is released under the Creative Commons Attribution-Share-Alike License 3.0.

Financial_instrument
 



 



 
Music Scenes