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CMA Final · Corporate Financial Reporting · Accounting of Financial Instruments

Under Ind AS 109 Appendix D, how must an entity present the gain or loss arising from extinguishing a financial liability by issuing equity instruments to a creditor?

The gain or loss must be recognised in profit or loss and disclosed as a separate line item in profit or loss or in the notes. It is not taken to equity, OCI or securities premium.

  1. ADirectly in retained earnings within equity
  2. BIn other comprehensive income
  3. CAs a separate line item in profit or loss or in the notesCorrect
  4. DNetted against the securities premium account

Explanation

The gain or loss, being the difference between the carrying amount of the liability extinguished and the consideration paid, is recognised in profit or loss. The entity must disclose it as a separate line item in profit or loss or in the notes. OCI or equity treatment is not permitted.

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