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CMA Final · Corporate Financial Reporting · Accounting of Financial Instruments

Which statement about disclosure of the gain or loss arising when equity instruments are issued to extinguish a financial liability under Ind AS 109 Appendix D is correct?

The gain or loss on extinguishing a financial liability with equity instruments must be disclosed as a separate line item in profit or loss or in the notes. It cannot be netted against finance cost or deferred.

  1. AIt is disclosed as a separate line item in profit or loss or in the notesCorrect
  2. BIt is netted against finance cost with no separate disclosure
  3. CIt is taken to the capital reserve and not disclosed
  4. DIt is deferred and amortised over the life of the shares

Explanation

The Appendix requires the gain or loss to be disclosed as a separate line item in profit or loss or in the notes. It is not netted off, not taken to reserves and not deferred.

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