Explain How AASB 132 Can Require Classification of a Financial

question 10

Essay

Explain how AASB 132 can require classification of a financial instrument as a liability,rather than equity,even though settlement of the instrument will be in the equity of the entity.

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Definitions:

Percentage Of Sales

A financial ratio that compares a particular expense or income to the total sales, expressing the result as a percentage to analyze trends or performance.

Margin Of Safety

The difference between actual or projected sales and the break-even point, usually expressed in percentage terms, indicating the buffer against a loss.

Operating Leverage

The degree to which a firm can use fixed operating costs to magnify the effects of changes in revenue on its operating income.

Salesvolume

Refers to the total number of units sold within a specific period.