Definitions of financial liability and financial asset

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Question

Handbook and Analysis ETS borrowed $4 million from PIC and has recorded it as a long term debt on its financial statements. However, part of this loan should be recorded as equity and the rest into debt. IAS 32 - Financial instruments section 15 states that"the issuer of a financial instrument shall classify the instrument, or its component parts, on initial recognition as a financial liability, a financial asset or an equity instrument in accordance with the substance of the contractual arrangement and the definitions of a financial liability, a financial asset and an equity instrument."

Reference no: EM133674891

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