Importance of International Financial Reporting Standards Free Essay Example, 2500 words

As described in Deloitte article IAS 29 - Financial Instruments: Recognition and Measurement (n. d.), IAS 39 provides a clear definition of accounting for financial instruments, and it also gives a clear understanding of the classification of those issuing financial instruments as either financial liabilities or equity instruments. It is important to note that the IAS 39 does not consider accounting for equity instruments and the reporting entity issues whereas it addresses accounting for financial liabilities (Deloitte, IAS 39). When it comes to the classification of financial assets, IAS 39 states that financial assets should be classified in one of the categories including financial assets at fair value through profit or loss, available for sale financial assets, loans and receivables, and held to maturity investments (Deloitte, IAS 39). These categories are effective to provide crucial information about the recognition and measurement of a specific financial asset in the financ ial statements. The first category (financial asset at fair value through profit or loss) is subcategorized into two such as designated and held for trading. The subcategory of designated indicates a particular financial asset that, on initial recognition, is designated as an asset which has to be measured at fair value through profit or loss (Deloitte, IAS 39). We will write a custom essay sample on Importance of International Financial Reporting Standards or any topic specifically for you Only $17.96 $11.86/page