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hi Werty,
could you tell me how to determine the settlement when a choice in cash or equity for purchase goods or service receive under IFRS 2? i.e. Leigh question (b) in BPP kit.thanks!
Such a mixed instrument is a “compound instrument” the techniques is to try to value the liability element and the equity element. However, valuing the equity element is rather difficult – how can anyone be certain of the share value in the future.
So, value the debt element now and the balance of the purchase price ( 4m – 3.9m ) is then equity.
The valuation should be reviewed at each year end and adjusted as necessary
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