Page 59 - F2 Integrated Workbook STUDENT 2019

Financial instruments

1.3 Financial asset or financial liability?

In an exam scenario, it is important that you can spot the difference
between the types of instrument. The wording of the scenario is
crucial in order to accurately determine the type of instrument
involved.

Action Examples Providing or Instrument
Raising
finance?

BUYS  Company buys a 5% Providing Asset
bonds/debentures debenture for £1m

BUYS  Company buys 1m $1 Providing Asset
shares shares at $1.50 per
share

ISSUES  Company issues a 5% Raising Liability
bond/debentures debenture for £1m

ISSUES  Company issues 1m Raising Equity
shares $1 shares at $1.50 per
share

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