Under IFRS 2, with Respect to Choice-Of-Settlement Share-Based Payments, If

question 36

Multiple Choice

Under IFRS 2, with respect to choice-of-settlement share-based payments, if the supplier chooses the cash settlement, the entity is deemed to have issued a compound financial instrument consisting of debt and equity.When cash is received, how does the supplier applies it?

• A)Only against the equity portion
• B)Apportioned between debt and equity based on relative fair market value of each component
• C)Only against current year liabilities
• D)Only against the debt portion

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Definitions:

Equilibrium

A state in a market where supply equals demand, leading to stable prices and quantities.

Strike Prices

The predetermined prices at which the holder of an option can buy (call option) or sell (put option) the underlying asset.

Exercise Price

The Exercise Price, also known as the strike price, is the price at which the holder of an option contract can buy (in the case of a call option) or sell (in the case of a put option) the underlying asset or security.

Risk-Free Rate

The hypothetical rate of return on an investment with no risk of financial loss, often represented by the yield on government securities.