IDENTIFICATION OF FINANCIAL INSTRUMENTS AS AN OBJECT OF ACCOUNTING

Abstract

Financial instruments, which appeared in the international arena of accounting regulations in October 1986, are still considered one of the most complex objects of accounting. The difficulties of their accounting recording are often associated with a complicated regulation of the relevant issue within international and national standards for accounting and financial reporting. At the same time, one ignores the fact that these specific objects of accounting have been used in the economy much earlier than their accounting regulations are formed. Not least important is the aspect that financial instruments have a contractual nature, which determines the dependence of their identification as an object of accounting on professional judgment. The purpose of the research is to cover the preconditions for the emergence of financial instruments in the accounting system and elucidate the reasons for the complexity of their identification as an object of accounting. The subject of the research is the theoretical background of the identification of financial instruments as an object of accounting. This research has theoretical nature that predetermined a set of methods for its conducting, as follows: analysis – to distinguish between the industrial, financial, and digital epochs and establish the relevance of financial instruments to them; abstraction and comparison – to clarify the peculiarities, common and distinctive features of accounting recording of financial instruments in the production, financial and digital eras; graphical method – to visualize the sequence of the emergence of the financial instruments in accounting and the identified contradictions when recording them in the balance sheet. The application of the mentioned methodology allowed elucidating the prerequisites for the emergence of financial instruments in accounting and specifying the reasons for the complexity to identify financial assets, financial liabilities, and equity instruments as objects of accounting. Approaches, which have been formed in the accounting system during the predominance of assets of the real economy, do not undergo the necessary transformations and adaptations to the objects that represent a virtual component of the economy. Moreover, the balance sheet as the basic form of financial reporting of any enterprise still reflects the production era, which gave way to the financial and digital ones.