Non-financial assets

  • Inventories, plant and machinery, properties and other intangible assets are examples of non-financial assets that are not financial instruments
  • Such assets even if it is held as an investment (as opposed to stock-in-trade) are not regarded as financial instruments
  • A contract to deal with non-financial asset at a specified price at a specified future date is also not a financial instrument
  • Thus commodity contracts that provide for settlement only by the receipt or delivery of a non-financial item are not financial instruments
  • However, contracts to buy or sell non-financial items that can be settled net or by exchanging financial instruments, or in which the non-financial item is readily convertible to cash, are within the scope of IAS 32 as if they were financial instruments
  • Right to exercise a future benefit in the form of receiving goods or services is not a financial asset e.g., pre-paid expenses – as there is no right to receive cash or any other financial asset

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