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Financial asset
A financial asset is a non-physical asset whose value is derived from a contractual claim, such as bank deposits, bonds, and participations in companies' share capital. Financial assets are usually more liquid than other tangible assets, such as commodities or real estate.[1][2][3][4]
Financial assets are opposed to non-financial assets, property rights which include both tangible property (sometimes also called real assets) such as land, real estate or commodities and intangible assets such as intellectual property, like copyrights, patents, trademarks, data etc.
Types
According to the International Financial Reporting Standards (IFRS), a financial asset can be:
Treatment of financial assets under IFRS
Under IFRS, financial assets are classified into four broad categories which determine the way in which they are measured and reported:
For financial assets to be measured at fair value through profit or loss by designation, designation is only possible at the amount the asset was initially recognized at. Moreover, designation is not possible for equity instruments which are not traded in an active market and the fair value of which cannot be reliably determined. Further (alternative) requirements for designation are e.g. at least a clear diminution of a "mismatch" with other financial assets or liabilities,[7] an internal valuation and reporting and steering at fair value,[8] or a combined contract with an embedded derivative which is not immaterial and which may be separated.[9] Regarding financial assets available for sale by designation, designation is only possible at the amount the asset was initially recognized at as well. However, there are no further restrictions or requirements.
See also
Mark-to-market accounting
References
  1. ^ root (20 November 2003). "Financial Asset". Retrieved 2 December 2016.
  2. ^ "What are Financial Assets?". Retrieved 2 December 2016.
  3. ^ "What is Financial Asset? definition and meaning". Retrieved 2 December 2016.
  4. ^ "Financial assets". Retrieved 2 December 2016.
  5. ^ International Accounting Standard (IAS) 32.11
  6. ^ International Accounting Standard (IAS) 32.9
  7. ^ International Accounting Standard (IAS) 32.9b i
  8. ^ International Accounting Standard (IAS) 32.9b ii
  9. ^ International Accounting Standard (IAS) 32.11a
Last edited on 20 April 2021, at 16:30
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