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Restrictions like LACK OF ACCESS TO FOREIGN CURRENCY or NEED FOR REGULATORY APPROVAL to make a payment affect the issuer's contractual obligation under Ind AS 32 in which way?
AThey convert the financial liability into equity until the restriction is resolved
BThey permit netting of the obligation against future receivables
CThey eliminate the contractual obligation because the issuer cannot legally pay
DThey are ignored — they do not negate the issuer's contractual obligation or the holder's contractual right
Answer & Solution
Correct answer: D. They are ignored — they do not negate the issuer's contractual obligation or the holder's contractual right
Ind AS 32 explicitly states that practical or legal restrictions on the issuer's ability to make the payment (forex shortage, regulatory approvals) do NOT negate the contractual obligation or the holder's right. The instrument remains a financial liability — the restrictions affect realisability, not classification.
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