If the Arrangement in a Share-Based Transaction Provides Either the Entity

question 56

Multiple Choice

If the arrangement in a share-based transaction provides either the entity or the counter party with the choice of cash settlement or issuance of the equity instruments,what is the accounting treatment required in AASB 2?

• A) similar treatment with cash-settled transactions if the entity has incurred a liability to settle in cash or other assets
• B) similar treatment with equity-settled transactions if the entity has not incurred a liability
• C) Where the other party has the right to choose the settlement basis then it should be accounted for simular to a compound financial instrument.
• D) All of the given answers are correct.

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Definitions:

Ratify Contracts

The formal approval or confirmation of a contract, making it officially valid.

Principals

The main parties involved in a transaction or contract, typically who have the primary responsibility and interest in the agreement.

Agents

Individuals or entities authorized to act on behalf of another, known as the principal, in business transactions or negotiations.

Customized Equipment

Machinery or tools designed and built to meet the specific requirements of a particular user.