Solution:

Yes, the forward contract is a financial instrument to both X Inc and Y Inc.

In this case, X Inc has entered into a forward contract to sell its identified PPE to Y Inc for $ 100 million after 3 years. A forward contract is a type of derivative instrument that involves an agreement to buy or sell an underlying asset at a future date at a pre-determined price. The underlying asset in this case is the identified PPE of X Inc.

As per the definition of financial instrument under IAS 32, a financial instrument is any contract that gives rise to a financial asset of one entity and a financial liability or equity instrument of another entity. In this case, the forward contract gives rise to a financial asset for X Inc (the right to receive $ 100 million after 3 years) and a financial liability for Y Inc (the obligation to pay $ 100 million after 3 years).

Therefore, the forward contract is a financial instrument to both X Inc and Y Inc.