Under the Requirements of the AASB Framework How Would Convertible

question 61

Multiple Choice

Under the requirements of the AASB 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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