A financial asset is any asset that derives its value from a contractual claim or agreement. Typically, financial assets are either debt instruments or equity instruments.
Debt instruments are financial assets that represent a claim on the underlying assets or cash flows of a debtor. Common examples of debt instruments include bonds, loans, and mortgages.
Equity instruments are financial assets that represent a residual claim on the underlying assets or cash flows of a business. Common examples of equity instruments include stocks and shares. What is IFRS 9 in simple terms? IFRS 9 is the International Financial Reporting Standard for financial instruments. It was published by the International Accounting Standards Board in 2009 and is effective for annual periods beginning on or after January 1, 2018.
The standard provides guidance on the recognition, classification, and measurement of financial instruments, as well as on hedge accounting. It replaces the previous guidance in IAS 39 Financial Instruments: Recognition and Measurement.
IFRS 9 is part of a larger project to replace all of the existing guidance on financial instruments in IFRS. The other parts of the project are IFRS 7 Financial Instruments: Disclosures and IFRS 10 Consolidated Financial Statements.
What are two types of assets?
1. Current assets are those assets which are reasonably expected to be converted into cash within one year. Examples of current assets include cash and cash equivalents, Accounts Receivable, and Inventory.
2. Non-current assets are those assets which are not expected to be converted into cash within one year. Examples of non-current assets include Property, Plant, and Equipment, Goodwill, and Intangible Assets.
What are the 6 financial assets?
1. Accounts receivable: This asset represents the amount of money that is owed to a company by its customers.
2. Inventory: This asset represents the raw materials, finished goods, and work-in-progress that a company has on hand.
3. Investments: This asset represents the money that a company has invested in stocks, bonds, and other securities.
4. Property, plant, and equipment: This asset represents the buildings, machinery, and other physical assets that a company owns.
5. Goodwill: This asset represents the intangible asset of a company that is not physical in nature, such as its reputation or brand.
6. Patents: This asset represents the legal right that a company has to exclude others from making, using, or selling its invention. What are the 4 types of financial assets? There are four types of financial assets: cash, receivables, inventory, and investments.
Cash: This asset includes cash on hand, checking account balances, and money market balances.
Receivables: This asset is composed of accounts receivable, which are IOUs from customers who have purchased goods or services on credit.
Inventory: This asset consists of the raw materials, work-in-progress, and finished goods that a company has for sale.
Investments: This asset includes stocks, bonds, and other securities that a company has purchased for long-term gain.
What is the difference between financial asset and asset? In accounting, the term "asset" refers to anything of value that is owned by an individual or company. This can include cash, investments, property, and equipment. The term "financial asset" specifically refers to an asset that can be easily converted into cash. This would include items such as stocks, bonds, and bank accounts.