|Capital instruments are classified, depending on substance of issuer’s contractual obligations, as either liability or equity.
Mandatorily redeemable preference shares are classified as liabilities
|Similar to IFRS but certain redeemable instruments are permitted to be classified as ‘mezzanine equity’ (i.e., outside of permanent equity).
Mandatorily redeemable instruments with a date or event-certain redemption are classified as liabilities
|No Specific guidance. In practice, classification is based on legal form rather than substance.
All preference shares are disclosed separately as share capital under shareholder’s funds
|Convertible debt (fixed number of shares for a fixed amount of cash) is accounted for on split basis, with proceeds allocated between equity and debt.
|Conventional convertible debt is usually recognised entirely as liability, unless there is a beneficial conversion feature.
|Convertible debt is recognised as a liability based on its legal form without any split
|Derecognition of financial
|Liabilities are derecognized when extinguished. Difference between
carrying amount and amount paid is recognised in income statement.
|Similar to IFRS
|No specific guidance; in
practice, treatment would be similar to IFRS based on substance of the transaction
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