Is It Basic or Not? How to Classify Financial Instruments Under Section 11

Now that you understand what a financial instrument is, the next step is to learn how to classify it correctly. This matters because your choice affects how the item is measured, disclosed and tested for impairment. Section 11 of the IFRS for SMEs separates financial instruments into two types: basic and complex. In this article, we explain how to tell the difference in simple terms. We guide you through the rules step by step, using clear examples and everyday situations. By the end, you will feel confident about knowing which part of the standard to apply.