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Sir, i did some research on the classification of financial instruments as debt. The key criteria is the ‘contractual obligation’ of course, but i came across two distinct examples which i need some clarifications on. Among other things, a financial liability can be any of these two examples:
1) A derivative contract that may be settled by a fixed amount of the issuing entity’s own equity instruments.
2) A non derivative contract that may be settled by a variable amount of the issuing entity’s own equity instruments.
What bases was used here to validate classification as debt?
Kindly clarify sir.
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