Financial Liability - Ind AS - Indian Accounting Standards - Companies Law

Financial Liability A financial liability is any liability that is: (a) a contractual obligation : to deliver cash or another financial asset to another entity; or Examples: Trading liability, loan taken to exchange financial assets or financial liabilities with another entity under conditions that are potentially unfavourable to the entity; or (b) a contract that will or may be settled in the entity s own equity instruments and is: a Non-Derivative for which the entity is or may be obliged to deliver a variable number of the entity s own equity instruments; or a Derivative that will or may be settled other than By the exchange of a fixed amount of cash or Another financial asset for a fixed number of the entity s own equity instruments. Based on above definition the following are not FINANCIAL LIABILITIES, they are EQUITY INSTRUMENTS- For this purpose, rights, options or warrants to acquire a fixed number of the entity s own equity instruments for a fixed amount of any currency are equity instruments if the entity offers the rights, options or warrants pro rata to all of its existing owners of the same class of its own non-derivative equity instruments. Apart from the aforesaid, the equity conversion option embedded in a convertible bond denominated in foreign currency to acquire a fixed number of the entity s own equity instruments is an equity instrument if the exercise price is fixed in any currency. Also, for these purposes the entity s own equity instruments do not include puttable financial instruments that are classified as equity instruments.