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Which of the following gives rise to a FINANCIAL LIABILITY for the issuing entity under Ind AS 32?
AIncome tax payable to the government for the year
BConstructive obligation for an announced restructuring under Ind AS 37
CProvision for product warranty obligations on goods sold
DMandatorily redeemable preference shares with a fixed redemption date
Answer & Solution
Correct answer: D. Mandatorily redeemable preference shares with a fixed redemption date
Mandatorily redeemable preference shares create a contractual obligation to deliver cash at a fixed future date — squarely a financial liability under Ind AS 32. The other three (statutory tax, delivery-of-goods/services warranties, constructive non-contractual obligations) do not arise from a contract and therefore fall outside Ind AS 32, even though they may be liabilities under other Ind ASs.
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