Lecture 07 - Financial Instruments s2 09

Lecture 07 - Financial Instruments s2 09 - ACCT2011...

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1 ACCT2011 Financial Accounting A Week 07 Financial Instruments Readings ! Deegan ! ch. 14, pp. 487-9 ! ch. 15, pp. 504-20, 533-5, 542-9 ! AASB 7 Financial Instruments: Disclosure, para. 8,18 –9, 21, 31-42 ! AASB 132 Financial Instruments: Presentation, para. 11, 15-18(a) ! AASB 139 Financial Instruments: Recognition and Measurement, para. 9 definitions of held to maturity investments, loans and receivables, available for sale assets, 43, 45 (a) and (b), 55, AG69 Outline of Lecture 1. Introduction 2. Equity instruments 3. Classification of financial assets and implications for measurement 4. Derivative financial instruments 1. Options contracts 5. Compound (hybrid) financial instruments 1. Measurement of convertible notes 6. Disclosure
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2 1. Introduction - Definitions 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 (AASB 132, para. 11). A financial asset is any asset that is: a) Cash b) An equity instrument of another entity c) A contractual right to receive cash or another fin. asset from another entity A financial asset is any asset that is: (cont.) OR a contractual right to exchange financial instruments with another entity under conditions that are potentially favourable (d) Certain contracts that may be settled in an entity’s own equity instruments Part (d) outside scope of Fin A AASB 132, para. 11
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3 A financial liability is any liability that is a contractual obligation to: a) deliver cash/other financial asset to another entity b) exchange financial instruments with another entity under conditions that are potentially unfavourable c) Certain contracts that may be settled in an entity’s own equity instruments (outside scope of Fin A) An equity instrument ! Is any contract that evidences a residual interest in the assets of a liability after deducting all of its liabilities (AASB 132.11) ! E.g., ordinary shares Liability or Equity ! If an entity does not have an unconditional right to avoid delivering cash or another financial asset to settle a contractual obligation … it’s a liability (AASB 132.19) !
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This note was uploaded on 08/27/2011 for the course ACCT 2011 taught by Professor D during the Three '11 term at University of Sydney.

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Lecture 07 - Financial Instruments s2 09 - ACCT2011...

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