Compound Financial Instruments

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....e classified separately as financial liabilities, financial assets or equity instruments. Measurement - The issuer of a bond convertible into ordinary shares first determines the carrying amount of the liability component by measuring the fair value of a similar liability (including any embedded non-equity derivative features) that does not have an associated equity component. The carrying amount....

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....Steps need to follow for accounting of Compound Financial Instrument: - Step 1 - Compound Financial instrument has to measure in initial recognition in 2 parameters Financial Liability Component & Equity Instrument Component * For Financial Liability Component - Present Value of future cash flows in the nature of 'Financial Liability' discounted using market interest rate on similar instruments....