Under the Requirements of the IASB Conceptual Framework How Would

question 60

Multiple Choice

Under the requirements of the IASB Conceptual Framework how would convertible notes be classified in the statement of financial position?

• A)They have the essential characteristics of debt and, using the principle of prudence, would be classified as a liability.
• B)They would be classified in a separate category between liabilities and equity.
• C)They would be classified as either liabilities or equity at any balance date based on the probability at that time that the notes would, or would not, be converted.
• D)They have the essential characteristics of shares and, using the principle of substance over form, they would be classified as equity.

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Definitions:

Currencies

Different systems of money in use, recognized by various countries or regions for the exchange of goods, services, or debt.

LIFO Reserve

A LIFO reserve is an accounting metric that companies use to account for the difference in cost of goods sold (COGS) calculated using the Last-In, First-Out (LIFO) method and another inventory accounting method, often the First-In, First-Out (FIFO) method.

FIFO

A stock control method where the oldest inventory items are sold first, ensuring that the cost of inventory matches the actual flow of goods.

Inventory Records

Documentation detailing the quantities, condition, and locations of all the inventory items a company holds.