Financial instruments - part 1

In this lesson

1. 0:00 Understanding financial instruments definition
2. 2:21 Bank loans and shares as examples
3. 4:00 IFRS 9 classification framework overview
4. 4:55 Amortised cost assets explained
5. 6:12 Measuring amortised cost financial assets
6. 7:45 Fair value financial assets overview
7. 8:16 Fair value through PNL vs OCI
8. 9:40 Initial and subsequent measurement methods

About this lesson

Financial instruments are contracts that create a financial asset for one party and a financial liability or equity instrument for another—like a bank loan or share purchase. You'll discover the two main categories of financial assets: amortised cost assets (which have a maturity date and are measured at cost plus transaction costs, then remeasured using the amortised cost method) and fair value assets (which have no maturity date and are subdivided into fair value through profit and loss and fair value through other comprehensive income). Understanding this classification is essential for Financial Reporting and Strategic Business Reporting papers, as it determines how you'll measure and account for investments throughout the financial statements. By the end, you'll know exactly when to apply each category and how transaction costs are treated differently depending on your intention to hold or sell the investment.

Duration: 12m