CFM16075a – Accounting for financial instruments: IAS 32 and IAS 39: examples of financial assets and liabilities

Examples of financial instruments

The definitions in CFM16075 mean that the following are financial instruments:

1. cash, demand and time deposits, debtors, creditors and loans of all kinds that are to be settled in cash
2. unconditional lease obligations
3. loan notes, bonds, debentures and other debt securities
4. warrants or options to subscribe for shares of, or purchase shares from, the issuing entity
5. obligations of an entity to issue or deliver shares under such warrants or options
6. derivative financial instruments
7. contingent liabilities that arise from contracts and will, if they crystallise, be settled in cash – an example is a financial guarantee.

Some of these instruments may, however, be outside the scope of IAS 32 and IAS 39 – see CFM16065.

Similarly, the definitions mean that the following are not financial instruments:

1. physical assets, such as stock, buildings, plant and equipment
2. intangible assets such as patents and trademarks
3. prepayments for goods or services
4. obligations to be settled by delivering goods or rendering services, such as most warranty obligations
5. income taxes, including deferred tax, since these are statutory rather than contractual obligations
6. derivatives to be settled by physical delivery
7. contingent items that do not arise from contracts, for example a contingent liability to pay damages if the company loses a court case; and
8. minority interests.