Which of the following qualifies as a financial asset?

A financial asset is defined as an asset that is typically expected to provide economic benefits through future cash flows or ownership interest in another entity. The correct choice, which refers to a right to receive cash or an equity instrument, fits this definition perfectly.

This choice represents a claim or an entitlement to future economic resources, which may come in the form of cash payments or interests in other entities, meaning it has the potential to generate future economic benefits. Such rights are at the core of what constitutes financial assets, as they are not necessarily tied to physical or tangible objects, but rather to financial rights.

In contrast, real estate properties owned by a corporation are considered tangible assets—these have physical substance and include properties that are utilized for operations. Inventory held for sale is classified as a current asset, as it represents goods that are intended for sale but do not qualify as financial assets under the definition, because they do not directly represent a claim on cash or securities. Lastly, a legal obligation of the entity does not qualify as a financial asset; instead, it represents a liability. Liabilities require the company to settle debts in the future, which is the opposite of what a financial asset represents.