Financial Instruments IAS 32,39 & IFRS 7

Yes NItin I have queries on Bank gurantee & L/C from audit point of view...If u can solve it , I would b very grateful.

PLs let me know.

REgards,

Lucky

wats ur query

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

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.

I was waiting for your reply for last 2 days...