Financial instruments

meyer cohn
Mind Map by meyer cohn, updated more than 1 year ago
meyer cohn
Created by meyer cohn about 6 years ago
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Summary part 1 of financial instruments

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Financial instruments
  1. Financial asset (FA)
      1. FV=> OCI : Only used when its an equity instrument & designated as such
        1. Impairment: 1. FV=>P/L = not tested; 2. other 2 methods = must test;
          1. Reclassification permitted
            1. Cash, equity instrument of other entity, right to receive financial asset
            2. Financial liability (FL)
              1. Fair value: Through P/L or OCI; OR Amortised cost: use effective interest rate method
                1. WHICH 1? - Depends on intention >If to receive contractual CFj = amortised cost
                  1. Transaction cost: 1. FV=> P/L = excl. from value; 2. FV=> OCI = Incl. in value; 3. Amortised cost=> Incl in value
                  2. Reclassification not permitted
                    1. Obligation to deliver cash or any other financial asset
                      1. Compound instrument = PV of Fin. Liab & balancing value E
                      2. Equity instrument (EI)
                        1. Residual interest in entity after deducting all its liabilities
                        2. A CONTRACT that gives rise to a FA for 1 entity and a FL or EI for another entity
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