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Yes, let's assumed it's interst free or dividend at the discretion of the issuer.

Hi Ketan, My point on diversity in practice is that a preference share/bond that is no mandatorily converted into cash or a variable number of shares but has an option to the holder to convert into a variable number of shares, for some people, e.g., DJP, is a financial liability in its entirety. As ...

fixed to fixed is only applicable to non-derivative that is converted into a variable number of equity or derivative converted into a variable number of equity. So, if you only look at the redemption feature (not the conversion feature) it has no these characteristics, therefore, the fixed to fixed ...

agree with the item 2, but disagree with the item 1. Please let's discuss, please have a look at this case, don't you think they are similar? Thanks!

I think on this one, there is diversity in practice, it can be argued that the redemption feature and the conversion feature should be looked at separately. The redemption feature being an equity instrument, i.e., because no obligation to deliver cash or fixed number of equity instruments. But the c...

Just getting back to this, why it cannot be an equity host,I.e., no contractual obligation to pay cash for the redemption feature. And a derivative for the conversion feature?

Ias32 requires an instrument with a conversion feature to be analyzed separately isn't it?

1. If a convertible bond doesn't provide with mandatory redemption, but has a conversion option at the holder's discretion to be converted into a variable number of common shares, would the convertible bond include an equity host and an embedded derivative or, a liability in its entirety? 2. If a co...

Or eventually, Dr financial asset (for it will receive the shares in company C) Dr liability Eventually, the financial asset is fair valued, same as the financial liability, therefore, the effect of the financial assets cancel the liability so no P&L changes until the shares actually bought out?

Or
Dr other equity
Cr liability

I think this makes more sense

Company A and company B hold Company C (60% by A and 40% by B). What would be the accounting entries in company A, if company A has entered into an agreement with company B over the shares of C, if PBT of C reaches a certain level, then Company A is obliged to by 5% of company C at fair value at the...

How the shares will be valued?

You need to record the swap instrument as a derivative instrument, in accordance with IFRS 9. All the fluctuation in fair value is recognised in OCI.

sorry I read too quick, interest is also at the discretion of the issuer, yes, full equity I agree.

Similar to preference shares with principal at the discretion of the issuer and dividends are mandatory, They are not equity for the same reason.

my understand is that the principal is perpetual, but the interest is mandatory, so I don't agree with the assessment that it's an equity instrument, because for me it is a compound instrument, with equity being the residual value. because the principal is at the issuer's discretion but the interest...

you should follow the requirement of a cash flow hedge accounting.

Are you going to elect for hedge accounting?

So nightmarish that they deleted it?

many thanks Marek, do you have a more material one, with the whole PYA balance restated?

Hi,

I'm looking for some example of companies that have undertaken a PYA in their annual report. If you can think of any name, please share with me, thanks!

yes agreed, thanks!

If my description was unclear, I said, for D to keep its mino interests of 49% in B, but only sell C to A. I reckon that it's a legal question, but view is D cannot do so directly. It will need B to sell it's shares to A first.

I realized that this can only work by A buying the 70% of C from B. And then, D can get the benefit of a increased net assets in B. B can either distribute dividends to D or D can sell its shares in B. But it's not possible for D to only sell the 35% in C.

(1) If entity A pay cash to entity B to buy the 70% shares in C, and instruct B to do a dividend distribution, the result would be the same than (2) entity A directly paying B for the 35% worth. However, if route (2) is chosen, what would be the accounting in entity B as it will not receive consider...

Entity A has 65% interest over C and entity D has 35% interest over C. However, if entity A want to buy the 35% interests from D, to whom entity A should transfer the money? Should it buy the 70% shares in C from B and transfer the money to entity B which will transfer the money in relation to the 4...

if you have identified there are some intangibles, this will affect the goodwill.
similarly, if there are intangibles, NCI might have another fair value which may counterbalance the goodwill.

the above is a V0.

Parent A: Cash; 1100 Equity: 1100 Target: Net assets: 1000 Equity: 1000 Parent A subscribe for 1100 of the shares issued by the Target, existing shareholder will not participate and will lose majority. Parent A will hold 1100/2100=52.38% after issue. After issue: Target: Net assets: 2100 Equity: 210...

Whether you include it or not, it should not change your assessment of the goodwill. A PPA exercise should be performed.

Sometimes, the entity needs cash to grow and the existing shareholding can't put more cash into it, so it looks for external investors.

In this situation, you wouldn't get a goodwill, but depending on the percentage you acquire, you might end up with a bargain purchase.

Just moving it up in case.