11.3 | A financial instrument is a contract that gives rise to a financial asset of one entity and a financial liability or equity instrument of another entity. |
11.4 | [Deleted] |
11.5 | Basic financial instruments within the scope of Section 11 are those that satisfy the conditions in paragraph 11.8. Examples of financial instruments that normally satisfy those conditions include: |
(a) | cash; |
(b) | demand and fixed-term deposits when the entity is the depositor, eg bank accounts; |
(c) | commercial paper and commercial bills held; |
(d) | accounts, notes and loans receivable and payable; |
(e) | bonds and similar debt instruments; |
(f) | investments in non-derivative financial instruments that are equity of the issuer (eg most ordinary shares and certain preference shares); and [AMD 288] |
(g) | commitments to receive a loan and commitments to make a loan to another entity that meet the conditions of paragraph 11.8(c). |
11.6 | Examples of financial instruments that do not normally satisfy the conditions in paragraph 11.8, and are therefore within the scope of Section 12, include: |
(a) | asset-backed securities, such as collateralised mortgage obligations, repurchase agreements and securitised packages of receivables; |
(b) | derivatives, eg options, rights, warrants, futures contracts, forward contracts and interest rate swaps; [AMD 289] |
(c) | financial instruments that qualify and are designated as hedging instruments in accordance with the requirements in Section 12; and [AMD 3] |
(d) | commitments to make a loan to another entity and commitments to receive a loan, if the commitment can be settled net in cash. |
(e) | [deleted] |
11.6A | The initial classification of a financial instrument shall take into account the contractual terms including those relating to future variations. Once the classification of a financial instrument is determined at initial recognition, re-assessment is only required subsequently when there has been a modification of contractual terms that is relevant to an assessment of the classification. [AMD 290] |
AMD 288 Amendment Paragraph 11.5(f) amended by Amendments to FRS 102: The Financial Reporting Standard applicable in the UK and Republic of Ireland – Triennial review 2017 – Incremental improvements and clarifications (issued December 2017) Effective date 01/01/2019 Previous text (f) investments in non-convertible preference shares and non-puttable ordinary and preference shares; and |
AMD 289 Amendment Paragraph 11.6(b) amended by Amendments to FRS 102: The Financial Reporting Standard applicable in the UK and Republic of Ireland – Triennial review 2017 – Incremental improvements and clarifications (issued December 2017) Effective date 01/01/2019 Previous text (b) options, rights, warrants, futures contracts, forward contracts and interest rate swaps that can be settled in cash or by exchanging another financial instrument; |
AMD 3 Amendment Paragraph 11.6(c) amended by FRS 102 The Financial Reporting Standard applicable in the UK and Republic of Ireland (issued July 2014) Effective date 01/01/2015 Previous text (c) financial instruments that qualify and are designated as hedging instruments in accordance with the requirements in Section 12; and |
AMD 290 Amendment Paragraph 11.6A added by Amendments to FRS 102: The Financial Reporting Standard applicable in the UK and Republic of Ireland – Triennial review 2017 – Incremental improvements and clarifications (issued December 2017) Effective date 01/01/2019 |
![]() |
Licence and copyright | © 2018, LexisNexis Group a division of Reed Elsevier (UK) Ltd. All rights reserved. |