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CHAPTER 13 - FINANCIAL LIABILITIES AND COMPOUND FINANCIAL INSTRUMENTS,…
CHAPTER 13 - FINANCIAL LIABILITIES AND COMPOUND FINANCIAL INSTRUMENTS
Key Characteristics of Financial Liabilities:
Contractual
Obligation
: A legally enforceable agreement exists.
Delivery
of
Cash
or
Financial
Asset
: The obligation involves a transfer of value.
Potentially
Unfavorable
Terms
: The exchange may not be equitable.
Compound Financial Instruments
A compound financial instrument is a single contract that embodies both a liability component and an equity component.
Accounting for Compound Financial Instruments:
Splitting
the
Instrument
: The compound instrument is separated into its liability and equity components.
Valuation
: Each component is valued separately.
Recognition
: The liability component is recognized as a financial liability, while the equity component is recognized as equity.
Key Considerations for Compound Financial Instruments:
Fair
Value
Measurement
: The fair value of each component is determined using appropriate valuation techniques.
Transaction
Costs
: Transaction costs are allocated to the liability and equity components based on their relative fair values.
Subsequent
Measurement
: Each component is subsequently measured and accounted for according to its classification.
IFRS Standards Relevant to Financial Liabilities and Compound Financial Instruments:
IFRS 9 Financial Instruments
: Provides a comprehensive framework for the classification, measurement, and impairment of financial instruments.
IAS 32 Financial Instruments: Presentation
: Outlines the principles for presenting financial instruments in financial statements, including compound financial instruments.
MENGER SIMON PINO
GROUP 7
9:00 - 10:30
BSA 1