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Hi,
For the definition of financial asset and financial liability, they both have a case with a definition as A contract that will or may be settled in the entity’s own equity instruments and is a derivative that will or may be settled other than by the exchange of a fixed amount of cash or another financial asset for a fixed number of the entity’s own equity instruments
Can you help give me some real life example of this definition? And I dont really understand how can a financial liability and a financial asset both have same definition?
Thanks
Hi,
I think you would be looking at warrants and the reason why it will be either a financial asset or liability is because the warrant gives the right to buy the shares at a set price and so depending on the price of the share the value of the warrant will either be favourable (asset) or unfavourable (liability).
Hope this helps.
Thanks
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