Items that are not financial instruments (2024)

FAQs

Which of the following items is not a financial instrument? ›

The following are examples of items that are not financial instruments: intangible assets, inventories, right-of-use assets, prepaid expenses, deferred revenue, warranty obligations (IAS 32. AG10-AG11), and gold (IFRS 9. B. 1).

Examples of non-financial assets include tangible assets, such as land, buildings, motor vehicles, and equipment, as well as intangible assets, such as patents, goodwill, and intellectual property.

Common examples of financial instruments include stocks, exchange-traded funds (ETFs), mutual funds, real estate investment trusts (REITs), bonds, derivatives contracts (such as options, futures, and swaps), checks, certificates of deposit (CDs), bank deposits, and loans.

Off-balance sheet (OBS) assets are assets that don't appear on the balance sheet. OBS assets can be used to shelter financial statements from asset ownership and related debt. Common OBS assets include accounts receivable, leaseback agreements, and operating leases.

Some items, such as income tax and legal expenses, are commonly excluded because they are not related to production costs. Other items, such as dividends and amount written off, may be included or excluded depending on the company's accounting policies.

Physical assets, for example inventories, property, plant and equipment. Control of these assets creates an opportunity to generate an inflow of cash or another financial asset, but it does not give rise to a present right to receive cash or another financial asset.

Basic examples of financial instruments are cheques, bonds, securities. There are typically three types of financial instruments: cash instruments, derivative instruments, and foreign exchange instruments.

A gold bullion is not a financial instrument, similar to cash; it is a commodity. Although the bullion market is highly liquid, there is no contractual right to receive cash or another financial instrument inherent in a bullion.

Financial instruments recognized in the balance sheet include cash and cash equivalents, securities, other financial receivables, trade receivables, trade payables, loans and derivatives. Current investments and derivatives are recognized on the trade date.

What is not included in financial statements? ›

The primary focus of financial reporting is information about earnings and its components. Hence financial statement do not consider assets and liabilities expressed in non-monetary terms.

Off-balance sheet activities include items such as loan commitments, letters of credit, and revolving underwriting facilities. Institutions are required to report off-balance sheet items in conformance with Call Report Instructions.

Equity Shares is not a Money Market Instrument.

In simple words, any asset which holds capital and can be traded in the market is referred to as a financial instrument. Some examples of financial instruments are cheques, shares, stocks, bonds, futures, and options contracts.

Cash, stocks, bonds, mutual funds all are examples. Unlike land, property, commodities or other tangible physical assets, financial assets do not necessarily have inherent worth or even a physical existence. So from above definition you can conclude that PPE is a non-financial asset.