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The following information relates to ABC Ltd, which has Australian dollars as its functional currency, in the year ended 30 June 2020: 1. It purchased

The following information relates to ABC Ltd, which has Australian dollars as its functional currency, in the year ended 30 June 2020:

1. It purchased a debt instrument issued by another company with the intention of holding it for a maximum of two years before selling it to another party. This intention reflects the objective of the business model within which the debt instrument is held.

2. It entered into a speculative forward contract to exchange $4 000 000 for 3 100 000.

Required: Explain how the definitions of financial instruments and classification requirements of AASB 9 are applied to these transactions.

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