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Financial asset (derivaties)

Forums › Ask ACCA Tutor Forums › Ask the Tutor ACCA SBR Exams › Financial asset (derivaties)

  • This topic has 1 reply, 2 voices, and was last updated 8 years ago by P2-D2.
Viewing 2 posts - 1 through 2 (of 2 total)
  • Author
    Posts
  • October 1, 2016 at 9:00 am #342155
    Mahrukh
    Participant
    • Topics: 26
    • Replies: 38
    • ☆☆

    Hi,
    Company A has contracted to sell a building worth $10m to company B. In exchange B will issue a fixed 10m of its shares to A, after six months. In this case, the contract, which gives A, the right to receive shares of B, is a financial asset for A. Any change in the value of shares will result in a gain/loss to A.
    So the value of the contract, which gives A the right to receive shares, is derived from the value of the underlying asset i.e. B’s shares. Will this contract be treated as a derivatie, in A’s books?

    October 3, 2016 at 6:57 pm #342330
    P2-D2
    Keymaster
    • Topics: 4
    • Replies: 7198
    • ☆☆☆☆☆

    Hi,

    It sounds like a derivative as it meets the three criteria from both A and B’s perspective.

    Thanks

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