IAS 32Chapter 2Lesson 2
Instruments settled in own shares: the "fixed-for-fixed" test
Step 1 of 6Learning objectives
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A contract settled in own shares is an equity instrument if the issuer delivers a fixed number of its shares for a fixed amount of cash or another financial asset; otherwise it is a financial liability or asset.
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Learning objectives
- Explain the "fixed-for-fixed" condition for a contract settled in the issuer's own shares.
- Determine whether a contract settled in own shares is an equity instrument or a liability under the fixed-for-fixed condition.
- Analyse the classification of rights offered pro rata to existing owners when the exercise price is in a foreign currency.
- Justify the classification adopted in light of the fixed-for-fixed condition and its exception.