Equity Instrument
Accounting glossary · Understand, connect, apply
An equity instrument is a contract that represents a residual interest in an entity’s assets after its liabilities are deducted.
Example
Ordinary shares without mandatory redemption commonly give holders a residual interest in the issuer.
Remember the difference
An issuer assesses contractual obligations and the applicable IAS 32 criteria. An obligation to redeem shares for cash may change the classification.
Browse the accounting glossary · Read the IFRS Foundation reference
Prepared with AI assistance. Examples are fictional and simplified for learning.
Examples are simplified for learning. Where a term depends on US law, IFRS, US GAAP or a historical rule, check the context explained above and the requirements relevant to your course.
Study references: OpenStax financial accounting and managerial accounting. For reporting requirements, consult the applicable IFRS Standards or FASB guidance. US tax terms should be checked against the relevant tax-year IRS instructions.
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