The critical feature in di erentiating a nancial liability from an equity
instrument is the existence of a contractual obligation on one party to
the nancial instrument (the issuer) either to deliver cash or another
nancial asset to the other party (the holder) or to exchange another
nancial asset/liability with the holder under conditions that are
potentially unfavourable to the issuer.
(a) The contractual rights to the cash ows from the nancial asset expire; or
(b) It transfers substantially all the risks and rewards of ownership of the nancial asset to
another party.