IFRS 9, the long awaited standard for financial instruments, is applied since 1/1/2018. The purpose of this article is to assist students and practitioners into gaining an insight into the classification/designation of financial assets, one of the mostly affected areas by the new standard.
In simple terms, financial assets are resources of future benefits as any other asset, which due to their nature are subject to some more detailed and technical jargon. In this series of articles, we will deal with simple and mainstream instruments as investments in (equity) shares, receivables, loans and bonds.
For the diehards, I refer quickly to the financial assets definition, as given by IAS 32 Financial Instruments: Presentation, which are adopted by the new standard. An understanding of the most complicated categories referred to, is not necessary, within the context of this series of articles.