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When an instrument is reclassified from FINANCIAL LIABILITY to EQUITY under Ind AS 32 (because it now qualifies for the puttable-equity exception), the measurement is at:
AOriginal issue price, with the difference recognised in retained earnings
BFair value at the date of reclassification, with the difference recognised in profit or loss
CThe amount of cash that would have been required to redeem the instrument
DCarrying value at the date of reclassification, with no gain or loss recognised
Answer & Solution
Correct answer: D. Carrying value at the date of reclassification, with no gain or loss recognised
Ind AS 32.16F — liability-to-equity reclassification uses the CARRYING value at reclassification, with NO gain/loss recognised. The reverse direction (equity to liability) uses FAIR VALUE at reclassification with the difference taken to equity.
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