A financial asset is any asset that is:

1) cash;

2) an equity instrument of another undertaking;

3) a contractual right:

i) to receive cash, or another financial asset, from another undertaking; or

ii) to exchange financial assets, or financial liabilities, with another undertaking under conditions that are potentially favourable (profitable) to the undertaking; or

4) a contract that will, or may, be settled in the undertaking's own equity instruments and is:

i) a non-derivative for which the undertaking is, or may be, obliged to receive a variable number of the undertaking's own equity instruments; or

ii) a derivative that will, or may, be settled other than by the exchange of a fixed amount of cash, or another financial asset, for a fixed number of the undertaking's own equity instruments.

For this purpose, the undertaking's own equity instruments do not include puttable financial instruments classified as equity instruments,

· that impose on the undertaking an obligation to deliver to another party a pro rata share of the net assets of the undertaking only on liquidation, and

· are classified as equity instruments, or instruments that are contracts for the future receipt, or delivery, of the undertaking's own equity instruments.

According to IAS 32, a financial asset is any asset that is:

1. Cash
2. An equity instrument of another entity
3. A contractual right to receive cash or another financial asset from another entity
4. A contractual right to exchange financial assets or liabilities with another entity under conditions that are potentially favorable to the entity
5. A contract that will or may be settled in the entity's own equity instruments, and is not classified as an equity instrument of the entity itself
6. An option or forward contract that will or may be settled in cash or another financial asset

In simpler terms, a financial asset is any asset that has value and can be traded or sold in financial markets. Examples of financial assets include stocks, bonds, cash, and financial derivatives such as options and futures contracts. The classification of financial assets is important for accounting purposes, as different types of financial assets are subject to different accounting rules and regulations.