Hi Guys do let me know if you have any queries on Financial instruments
NITIN KHANDELWAL (SERVICE) (24 Points)
24 July 2009Hi Guys do let me know if you have any queries on Financial instruments
CA. Amit Daga
(Finance Controller CA. CS. CFA. CIFRS. M.COM. )
(9017 Points)
Replied 28 July 2009
wats ur query
rajesh_chauhan81
(22 Points)
Replied 13 March 2011
Hi Amit,
as per IAS 32 Pref shares will be treated as debt and If such fixed dividend/interest rate is lower than the market rate, then the value of the preference debt will also change so as to reflect its underlying fair value.
does this mean you will reduce your liability in balance sheet??...can you please help me understand this.
Similaly this "In case of convertible instruments such as foreign currency convertible bonds (FCCB), firms will have to fair value the bond liability resulting in interest charge for income statement, even if FCCB is at zero coupon rates. FCCB will be subjected to split accounting, which requires separation of the debt component and the option derivative at respective fair values."
Rajesh
Sandeep Garg
(Consolidation and IndAS Application)
(1056 Points)
Replied 15 March 2011
HI Nitin,
Pls answer..
Per para 11(d) of IAS 32: A financial asset is any asset that is:
(d) a contract that will or may be settled in the entity’s own equity instruments
and is:
(i) a non-derivative for which the entity is or may be obliged to receive a
variable number of the entity’s own equity instruments; or
(ii) a derivative that will or may be settled other than by the exchange of a
fixed amount of cash or another financial asset for a fixed number of
the entity’s own equity instruments. For this purpose the entity’s own
equity instruments do not include puttable financial instruments
classified as equity instruments in accordance with paragraphs 16A
and 16B, instruments that impose on the entity an obligation to
deliver to another party a pro rata share of the net assets of the entity
only on liquidation and are classified as equity instruments in
accordance with paragraphs 16C and 16D, or instruments that are
contracts for the future receipt or delivery of the entity’s own equity
instruments.
Query: Can you pls explain the above para with practical examples.
Sandeep Garg
(Consolidation and IndAS Application)
(1056 Points)
Replied 18 March 2011
I was waiting for your reply for last 2 days...
CAclubindia
