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IFRS 9

Basic Idea:

Financial instrument :

Any contract that gives rise to both a financial asset of one entity and a financial liability or equity instrument of another entity.

Financial asset:

This is a contract if a party is holding then it can give benefit to the holder.

Financial liability:

This is a contract if a party is holding then it will deliver cash to other party or cost us something when exchanging financial instrument.

Eg, Debt; redeemable preference shares.

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Equity instrument

Something not for cash or any other assets but they are settled in shares.

Eg, Shares; irredeemable preference shares.