Acquisition of business is quite common in today’s fast moving dynamics of the world and every such stakeholder of the entity would be interested to know all implications related to its valuation or for reporting purposes.
It is very common to have call, put or prepayment options associated with any debt instrument which talks about the right/ obligations to issuer/ holder for ending this Instrument by settling agreed amount as defined.
Let’s first understand what does CAPS & FLOORS means in Financial Market and why these are being used in various lending arrangements.
There are certain contractual arrangements which actually drive overall activities of an entity comparing to its voting structure where it does not has any power/ significance.
Many of our readers requested to share actual calculation and the process to bifurcate any convertible bonds between Equity & Liability and its related Journal Entry.
Current Indian Accounting has below provisions/ requirements related to the Contingent Assets – AS -29 Provisions, Contingent Liabilities and contingent assets Para -30- An enterprise should not recognise a contingent asset.
Once an entity obtains a significant influence (as per Ind-As-28) or Joint control (as per Ind-As-111 to fall under JV) then Equity accounting needs to be applied.
Recent news on approving merger of Vodafone & Idea at their board level has given many questions related to its accounting under the new framework i.e. Ind-As.
As you all might be aware about the meaning and significance of functional currency for an entity whose financial statements are being prepared under Ind-As/ IFRS.
There are certain foreign currency borrowings which have been taken in order to construct/ create some of the assets of the entity. Company is currently availing option given under para 46/46A of AS-11 and amortizing exchange difference over the period of loan.
