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Hi, Please help me with this case.
Company A has an investment in Company B in the form of preference shares with no obligation to pay dividends but gives Company A the right to free using some of Company B’s infrastructure.
Should I classify this as an equity instrument or debt instrument in the Company’s financial statements applying IAS 32 and IFRS9, in both conditions of redeemable shares and irredeemable shares ?Many thanks!
Which exam question is this please – I don’t recognise the scenario (or understand the word infrastructure)?
If you are asking out of curiosity, company B will record a financial liability if there is a contractual obligation to deliver cash or ANOTHER FINANCIAL ASSET
🙂
The word infrastructure here means house, pool, yard…
The investment in preference gives the investor the right to use these for free
So does this count as a financial asset, or just or policy benefit given to the investor?
Then how should i recognise these investment, financial liability or equity instrument, in each case of irredeemable and redeemable preferen shares ?
Many thanks !
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