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What are the classifications of financial assets?

What are the classifications of financial assets?

Classification of financial assets

  • Financial assets at fair value through profit or loss.
  • Available-for-sale financial assets.
  • Loans and receivables.
  • Held-to-maturity investments.

What are the criteria for the derecognition of a financial asset?


  • A financial asset (or part of a financial asset) is derecognised when:
  • If the entity retains control of the asset but does not retain or transfer substantially all the risks and rewards, the asset is recognised to the extent of the entity’s continuing involvement.

What is derecognition of financial asset?

Derecognition refers to the removal of an asset or liability (or a portion thereof) from an entity’s balance sheet. Derecognition questions can arise with respect to all types of assets and liabilities. This project focuses on financial instruments.

How are financial assets analyzed under IFRS 9?

Under IFRS 9 all financial instruments are initially measured at fair value plus or minus, in the case of a financial asset or financial liability not at fair value through profit or loss, transaction costs. This requirement is consistent with IAS 39.

What are the 4 types of financial assets?

a contractual claim to something of value; modern economies have four main types of financial assets: bank deposits, stocks, bonds, and loans. In reality, there are many more types of financial assets (like derivatives, calls, puts, and so on), but you only need to know the basics of these four types for this course.

What is the basis for classification of financial assets in line with IFRS 9?

Under IFRS 9, the default financial asset measurement category is fair value through profit or loss (FVTPL), while under IAS 39 it is available for sale (which also requires measurement at fair value, but results in less volatility in profit or loss because fair value changes are recognised in other comprehensive …

What is a financial asset IFRS 9?

Under IFRS 9 a financial asset is credit-impaired when one or more events that have occurred and have a significant impact on the expected future cash flows of the financial asset.

Which of the following is not a financial asset?

A non-financial asset refers to an asset that is not traded on the financial markets, and its value is derived from its physical characteristics rather than from contractual claims. Examples of non-financial assets include tangible assets. Examples include property, plant, and equipment.

How do you identify financial instruments?

A financial instrument is recognised in the financial statements when the entity becomes a party to the financial instrument contract. An entity removes a financial liability from its statement of financial position when its obligation is extinguished.

What is a financial asset under IFRS 9?

What are examples of financial assets?

Cash, stocks, bonds, mutual funds, and bank deposits are all are examples of financial assets. Unlike land, property, commodities, or other tangible physical assets, financial assets do not necessarily have inherent physical worth or even a physical form.