Abstract

The subject matter of this chapter is financial instruments. The term ‘financial instrument’ is used by the IASB to denote any contract that creates either a financial asset or a financial liability. Hence this chapter covers the reporting of financial assets and liabilities in the balance sheet, the reporting of income and gains relating to these items in the income statement and the disclosure of relevant information in the notes. Financial instruments have caused the IASB more problems than any other subject. Much of its recent time and effort has been taken up with the preparation of two IASs on financial instruments, which are among the most important, influential and controversial standards that the body has ever issued. This is the justification for devoting an entire chapter to the subject.

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