Since the arrival of FRS 102 almost a decade ago, dealing with financial instruments has been a perennial source of technical queries and mistakes. Although financial instrument issues (such as hedge accounting) can be complex, even apparently straightforward loans and investments can be problematic in practice. This session will focus on the most common issues facing SME businesses and will highlight accounting and auditing issues with practical examples. Topics will include:

• Deciding whether financial instruments are ‘basic’ or ‘other’
• Accounting for loans – common pitfalls
• Classification of financial liabilities
• Debt versus equity (including convertible debt)
• Impairment issues