Accounting Dictionary

A | B | C | D | E | F | G | H | I | J | K | L | M | N | O | P | Q | R | S | T | U | V | W | X | Y | Z

Financial Asset

Definition: Under international financial reporting standards, a financial asset can be any of these four items:

1. Cash
2. Equity of another entity
3. A contractual right to receive cash or similar from another entity or a potentially favorable exchange of financial assets or liabilities with another entity
4. A contract probably to be settled in the entity's own equity and that is a nonderivative under which the entity may receive a variable amount of its own equity instruments, or a derivative that probably will be settled other than through the exchange of cash or similar for a fixed amount of the entity's equity.

Examples of financial assets are cash, investments in the bonds and equity issued by other entities, receivables, and derivative financial assets.