Financial Liability Definition DEFINES Financial Liability any liability that is Contractual Obligation to DELIVER cash/another financial asset or to EXCHANGE financial assets/financial liabilities, Contract that will or May-be settled in entity’s own equity instruments.
Financial Liability Definition
IFRS 9 Financial Instruments specifies how an entity should CLASSIFY and MEASURE Financial Assets, Financial liabilities, and Contracts to buy or sell Non-Financial Items.
‘Financial Liability’ as per IFRS 9 is any liability that is:
| (a) A Contractual Obligation: – To deliver cash/another financial asset from another entity; OR – To exchange financial assets/financial liabilities under conditions that are potentially unfavorable to the entity. |
| (b) A Contract that will or May-be settled in the entity’s own Equity Instruments and is: – A non-derivative for which the entity is or May-be OBLIGED to deliver a variable number of the entity’s own ‘Equity Instruments’; OR – A derivative that will or May-be settled OTHER than by the exchange of a fixed amount of cash or another financial asset for a fixed number of the entity’s own ‘Equity Instruments’. |
The Bottom Line
Financial Liability Definition a concept that DEFINES ‘Financial Liability’ as any Liability that is Contractual Obligation, Contract that will or May-be settled in entity’s own equity instruments.
Chartered Accountant (Institute of Chartered Accountants of Pakistan)
Bachelor of Accounting Honours (Asia e University, Malaysia)