Summary IAS 32 – Financial Instruments: Presentation Detailed but concise IAS 32 notes on classification of financial instruments, equity vs liability, and disclosure requirements. These notes simplify complex concepts for ACCA FR & SBR exams, making revision e

IAS 32 Presentation of Financial Instruments


Financial instruments
Financial instrument is any contract that give rise to a financial asset of one entity and a financial liability or
equity instrument of another entity
E.g.




1- Definitions

A-Financial Assets

A financial asset is any asset that is:

1) Cash

2) an equity instrument of another entity

(we bought Ordinary shares of Pael, ICI, MCB from stock exchange)


3) a contractual right to receive cash or another financial asset from another entity
e.g.
• Debtors
• Investment in Debenture (liability instruments


4) a contractual right to exchange financial instruments with another entity under conditions
that are potentially favourable




STRATEGIC BUSINESS REPORTING (SBR) | By Zubair Saleem

, Any contract that may or will be settled in own equity instruments

5) a contract that will or may be settled in the entity’s own equity instruments, and is a
non-derivative for which the entity is or may be obliged to receive a variable number
of the entity’s own equity instruments

6) 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


B-Financial liability
1) contractual obligation to deliver cash or another financial asset to another
entity payable
Debenture issued (loan liya hua hain)

2) contractual obligation to exchange financial instruments with another entity
under conditions that are potentially unfavorable



Any contract that may or will be settled in own equity instruments



3) a contract that will or may be settled in the entity’s own equity instruments,
and is a non-derivative for which the entity is or may be obliged to deliver a
variable number of the entity’s own equity instruments


4) 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 exchange of a fixed amount
of cash or another financial asset for a fixed number of the entity’s own equity
instruments.


C-Equity
1) An equity instrument is any contract that evidences a residual interest in the
assets of an entity after deducting all of its liabilities.

2) Any contract that may or will be settled in own equity instruments




STRATEGIC BUSINESS REPORTING (SBR) | By Zubair Saleem