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“In accordance with IAS 32, a contract that obliges an entity to deliver a variable number of its own shares is classified as a financial liability. A contract that obliges an entity to deliver a variable number of its own shares does not appear to meet the definition of a liability in the Conceptual Framework.”
sir how does it not meet the definition of a liability in Conceptual Framework?
Unissued equity instruments are an economic resource for the entity that may generate economic benefits fro the entity from funding. So a present obligation to transfer them can be considered as a liability, why not?
basically am struggling to understand why entity’s own unissued shares are not economic resource/asset or even a finical asset for that matter.
can you give a justification for both separately
Contract to deliver variable number of shares = sounds pretty close to a present obligation to transfer economic benefits as a result of a past event to me. In any case, if this is a discussion question, they just want to see that you know the definition.
Unissued shares are like unpurchased sausages. They are a ‘nothing’
As I’ve said before, to pass this exam, you have to give clear simple explanations to scenarios. Be led by by my debriefs of 2019 and 2020 exams.
Finally, not that you asked this, remember that the only thing you must not do is run out of time:
4 mediocre answers = pass
2 good answers and 2 unanswered questions = not pass
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