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CA Final · Financial Reporting · Financial Instruments: Scope and Definitions

Deccan Pharma Ltd issued warrants to its promoters that meet the definition of an equity instrument in Ind AS 32. Deccan also holds warrants of another company, Konark Ltd, which are not interests in a subsidiary, associate or joint venture. Which statement is correct under the scope of Ind AS 109?

Deccan does not apply Ind AS 109 to the warrants it issued that qualify as equity under Ind AS 32, but as holder of Konark's warrants it applies Ind AS 109, since they are not interests in a subsidiary, associate or joint venture.

  1. ADeccan applies Ind AS 109 to its issued warrants, while Ind AS 109 is not applied to the Konark warrants it holds
  2. BDeccan applies Ind AS 109 to both sets of warrants
  3. CDeccan does not apply Ind AS 109 to its issued warrants, but applies it to the Konark warrants it holdsCorrect
  4. DDeccan does not apply Ind AS 109 to either set of warrants

Explanation

Para 2.1(d) excludes financial instruments issued by the entity that meet the equity definition in Ind AS 32, including options and warrants. However, the holder of such equity instruments applies Ind AS 109, unless the exception in (a) applies. Konark warrants are not subsidiary, associate or JV interests, so Deccan applies Ind AS 109 to them.

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