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Hi Mike!
Is loan a financial asset?
If yes or no, could you explain why?Thanks.
Yes – if it’s a loan FROM us to another entity
No – if it’s a loan TO us from another entity
Why? Because it satisfies the definition of a financial asset / liability as per the IFRS
A financial asset is a non-physical asset whose value is derived from a contractual claim, such as bank deposits, bonds, and stocks. Financial assets are usually more liquid than other tangible assets, such as commodities or real estate, and may be traded on financial markets
A financial liability can be either of these two items: A contractual obligation to deliver cash or similar to another entity or a potentially unfavorable exchange of financial assets or liabilities with another entity.
OK?
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