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May 17, 2020 at 6:04 pm
Sir, I am having difficulty in watching the videos. I wanted to know if any changes have been made. Thank you
August 4, 2019 at 2:35 pm
Sir, in the example 1- it clearly says that Lisa has the choice, if so what is beneficial for Lisa is to redeem the shares at nominal value by cash, instead of issuing equity shares.
in case the choice lies with the investor, the instrument can be classified as equity.
kindly correct me, if I am wrong.
December 19, 2019 at 6:22 am
You are right. I think the lecturer has mistaken about who actually has the choice in regards to how the shares will be redeemed. As per the question, the choice is with the company and so it will treated as liability.
July 14, 2020 at 4:08 pm
No. Remember what Chris said you need to analyse the substance and economic reality of the scenario. What would you do if you are the investor? What is the likelihood of the share price falling below its nominal value? If the chance of the share price falling below $1is slim then anyone would take option 2 because it gives greater benefit.
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