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Chapter 10

Financial assets and financial liabilities

Outcome

By the end of this session you should be able to:

 explain the need for an accounting standard on financial instruments
 define financial instruments in terms of financial assets and financial liabilities

 indicate how the following categories of financial instrument should be
measured and how gains and losses should be treated:

– amortised cost

– fair value through other comprehensive income

– fair value through profit or loss

 distinguish between debt and equity capital

 apply the requirements of relevant accounting standards to the issue and
finance costs of:

– equity

– redeemable preference shares and debt with no conversion rights

– convertible debt

 explain and account for the factoring of receivables

and answer questions relating to these areas.

The underpinning detail for this Chapter in your Integrated Workbook can
be found in Chapter 10 of your Study Text

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