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Hi Stephen,
I hope you can help clarify this for me. I don’t know if I am being completely stupid here or missing something key!
I’m studying Financial Instruments and getting confused about these versus ‘normal’ assets and liabilities that I would think about in financial statements under the basic conceptual framework. I understand that either way, there has to be two sides, so one entity would have the asset and another would have the liability.
Can you please help? if a question came up im not sure how I would know to refer to Financial Instrument related IFRS or IAS rules, or just think about the ‘item’ as basic is it a liability or an asset?
I hope you can understand this 🙂
Thank you!
In a SFP you find ASSETS LIABILITIES and EQUITY – the last is chare capital (and reserves)
Financial instruments can either be:
FINANCIAL ASSETS – lend money
FINANCIAL LIABILITIES – borrow money
EQUITY – issue sharesOne party will have a FINANCIAL ASSET
And the other party will have a FINANCIAL LIABILITY OR EQUITY.Does that help?
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