CERTYNEX IFRS ACADEMY

Océan SA holds as an investment a bond convertible into shares of the issuer. How does it treat the conversion derivative embedded in this financial asset?

It separates the derivative to measure it at FVTPL and measures the host at FVOCI.

It separates the conversion derivative and classifies the host bond at amortised cost.

It does not separate the derivative and classifies the whole at amortised cost, the conversion being an option like another.

It does not separate the derivative: the hybrid asset is classified as a whole, and exposure to equity prices rules out SPPI cash flows.