Accounting · Financial Instruments
Under IAS 32, how should the equity component of a compound financial instrument, such as a convertible loan note, be accounted for subsequent to initial recognition?
Verified Solution4 OptionsUpdated: October 2026👁️1 View
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- 1It must be reclassified entirely to liabilities if the market interest rate fluctuates.
- 2Its carrying amount remains unchanged and is not subsequently remeasured.✓
- 3It should be amortized over the life of the loan note using the effective interest method.
- 4It must be remeasured to fair value at each reporting date through profit or loss.
Correct answer
Its carrying amount remains unchanged and is not subsequently remeasured.
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