AASB 132 defines a financial instrument as:
A) any commitment that gives rise to either a financial asset or a financial liability of the reporting entity.
B) any contract that gives rise to both a financial asset of one entity and a financial liability or equity instrument of another entity.
C) any commitment that ultimately gives rise to an equity instrument of the reporting entity.
D) any contract that gives rise to both a financial asset of one entity and a financial liability or equity instrument of the same entity.

Question

Quizplus · Accepted Answer

A financial instrument is defined as a contract that gives rise to both a financial asset of one entity and a financial liability or equity instrument of another entity. This definition encompasses various financial instruments such as equities, bonds, derivatives, and loans. A financial instrument may also be non-contractual in nature, such as a share purchased in a company. Hence option B is the correct answer.

AASB 132 Defines a Financial Instrument As