Deegan, Ch.14 see readings tab on L@G: Financial instruments ***You may not need to write 100 words for all of these questions to answer them comprehensively*** QUESTION 1: Categorize each of the...

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Running Head ; 3101AFE Accounting Theory and Practice
Weekly workshop questions
TABLE OF CONTENTS
    SR. NO.
    Particulars
    Page no.
    1
    Categorize each of the following financial instruments as financial assets, financial liabilities, or equity instruments
    1
    2
    Factors influence the value of a derivative financial instrument, and how are changes in the value of derivatives treated from an accounting perspective
    2
    3
    Is there a consequence for reported profit or loss of the issuer if a preference share classifies the instrument as debt rather than equity? Explain the consequence
    3
    4
    Definition of Fair Value in ASSB 13? And what is the meaning of ‘orderly’ transaction’?
    3
    5
    Explain what is a right of set-off, and when does a right of set off exist
    4
    6
    Arthur Ltd has the following statement of financial position before any right of set-off is considered
    4
Page No.1
Categorize each of the following financial instruments as financial assets, financial liabilities, or equity instruments
1) Financial assets are liquid assets which are of tangible nature and which arises and have value due to contractual claim such as stocks, bonds or bank deposits.
2) Financial Liabilities are liabilities which arises due to
a) contractual obligation to deliver cash or another financial asset to another entity
b) If the condition of the entity is unfavorable and under such condition exchanging financial asset or financial liabilities with another entity
3) Equity instruments have been defined as a legal document which is having ownership right in a firm such as share Certificate etc.
     Financial Instrument
    Category of Financial Instrument
    (a)    Loan receivable
    Financial asset
    (b)    Loan payable
    Financial Liability
    (c)    Ordinary shares
    Equity instrument
    ( d ) Investment in the ordinary shares in part (c);
    Financial asset
    (e)    Cumulative, redeemable preference shares in the books of the issuer. Shares are redeemable at the option of the holder.
    Financial Liability
    (f)    The holder’s investment in the preference...