Financial Asset
A financial asset is defined as one of the following type of asset as per the Accounting Standards:
- Cash
- Equity instrument of another entity
- A contractual right
- To receive cash or another financial asset from another entity
- To exchange financial assets or financial liabilities with another entity under conditions that are potentially favorable to the entity
- A contract that will/may be settled in the entity’s own equity instruments and is
- A non-derivative resulting in receiving a variable number of the entity’s own equity instruments
- A derivative that will/may be settled other than by the exchange of a fixed amount of cash or another financial asset for a fixed number of entity’s own equity instruments
Financial Liability
A financial liability is defined as one of the following type of liabilities as per the Accounting Standards:
- A contractual obligation
- To deliver cash or another financial asset to another entity
- To exchange financial assets or financial liabilities with another entity under conditions that are potentially unfavourable to the entity
- A contract that will/may be settled in the entity’s own equity instruments and is
- A non-derivative resulting in delivering a variable number of the entity’s own equity instruments
- A derivative that will/may be settled other than by the exchange of a fixed amount of cash or another financial asset for a fixed number of entity’s own equity instruments
