Solution

The financial instrument issued by P Co. Limited to Q Co. Limited is a perpetual loan. This is because the loan has no fixed maturity date and can be considered as a permanent source of financing for the issuer.

The loan entitles the holder to a fixed interest rate of 8% per annum, which means that the issuer has a mandatory interest payment obligation to the holder.

It is important to note that the specific classification of the instrument as either equity or financial liability will depend on the specific terms and conditions of the instrument.

In this case, the loan is perpetual and the issuer has a mandatory interest payment obligation. Therefore, it is likely that the instrument will be classified as a financial liability, as the issuer has an obligation to pay cash for the interest payments. The specific classification will depend on the specific terms and conditions of the instrument, including the fair value of the liability component and the allocation of the proceeds between the liability and equity components.