CERTYNEX IFRS ACADEMY

Opale SA enters into a derivative on its own shares with a bank. At maturity, the bank chooses either to receive 5,000 Opale shares against a payment of 100,000 euros, or a net cash settlement of the difference between the value of the shares and 100,000 euros (case facts). How is this derivative classified?

As equity, because one of the settlement alternatives is the delivery of a fixed number of shares for a fixed amount of cash.

As a financial asset or liability, because one party chooses the settlement method and not all the settlement alternatives would result in an equity instrument.

As equity, because it is the bank, and not Opale, that chooses how the derivative is settled at maturity.

As equity until maturity, then as a financial liability when the bank exercises its choice of net settlement, the alternative finally chosen determining the classification.