Learning Unit 3

Question 1

Define a financial instrument

Answer 1

Contract that creates a financial asset for one company and a financial liability or equity instrument for another

Question 2

Credit losses

(Measurement)

Answer 2

Measured in a way that reflects: unbiased/probability weighted amount, time value of money, reasonable and supportable information that is available without undue cost or effort about past, present and future

Question 3

Allowance for credit losses

(Accounting principles)

Answer 3

Accrual basis and fair value, reflecting assets at fair value