In general, financial instruments should be classified according to their form, regardless of the instrument's substance.

Question

Quizplus · Accepted Answer

Financial instruments should be classified according to their substance, not just their form. This is because the form of an instrument may not always accurately reflect its underlying economic substance or the risks associated with it. For example, a derivative may appear to be a simple contract on its face, but in reality, it may represent a complex set of risks that are not readily apparent from the form of the instrument. Therefore, it is important to consider both the form and substance of a financial instrument when classifying it.

In General, Financial Instruments Should Be Classified According to Their