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Hi Chris, hope my message finds u well
It says if the amount of cash or own equity shares to be delivered is variable then the contract is a debt instrument wheras fixed arrangements would be treated as equity.
I cant figure out the sound reasoning behind this one, either case we are issuing our ordinary shares and would be dealt as equity.
Please help
Hi,
It is a bit of a strange one, and in all honesty there isn’t really a sound reasoning behind it in my opinion…….it is essentially due to the variable measurement not giving us a true idea of what the net assets would be so therefore we cannot recognise equity given how it is defined (assets after deducting the liabilities).
Thanks
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