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For an instrument to qualify as EQUITY under Ind AS 32.16, it must satisfy:
ABOTH conditions — no contractual obligation to deliver cash AND, if settled in own equity, the fixed-for-fixed test (or no obligation to deliver a variable number if non-derivative)
BEither of two conditions — no contractual obligation OR fixed-for-fixed settlement, whichever applies
COnly that it is labelled "equity" in the issuer's charter documents
DAny one of three tests — perpetual life, no dividend, or being convertible into shares
Answer & Solution
Correct answer: A. BOTH conditions — no contractual obligation to deliver cash AND, if settled in own equity, the fixed-for-fixed test (or no obligation to deliver a variable number if non-derivative)
Ind AS 32.16 requires BOTH conditions: (A) no contractual obligation to deliver cash/financial asset, AND (B) if settled in own equity, fixed-for-fixed (or no obligation to deliver a variable number, for non-derivatives). Labels in charter documents do not determine classification.
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