What is the deciding factor when determining how a financial instrument should be classified?
A) The anticipated date of settlement
B) Substance of the transaction
C) Legal form of the transaction
D) The delivery of cash on the settlement date

Question

Quizplus · Accepted Answer

The substance of the transaction is the primary factor when determining how a financial instrument should be classified, as it reflects the economic reality of the transaction rather than just its legal form or anticipated settlement date. In other words, the true nature of the transaction should be considered rather than just its outward appearance.

What Is the Deciding Factor When Determining How a Financial