What is a financial asset? Your 30 second recap for IAS 32

A financial asset is:

1. Cash
2. An equity instrument of another entity
3. A contractual right

  • to receive cash or another financial asset from another entity; or
  • to exchange financial assets or financial liabilities with another entity under conditions that are potentially favorable to the entity.

4. A contract that will or may be settled in the entity’s own equity instruments and is:

  • a non-derivative for which the entity is or may be obliged to receive a variable number of the entity’s own equity instruments; or
  • a derivative that will or may be settled other than by the exchange of a fixed amount of cash or another financial asset for a fixed number of the entity’s own equity instruments*
  • puttable instruments classified as equity or certain liabilities arising on liquidation classified by IAS 32 as equity instruments.

*For this purpose, the entity’s own equity instruments do not include instruments that are themselves contracts for the future receipt or delivery of the entity’s own equity instruments