1. Section 22 Liabilities & Equity

2. Scope This section does not apply to provisions for;
Contracts for Contingent Consideration in Business Combinations
Financial Instruments issued under Share Based Payments Transactions
Employee Benefit obligations (Section 28)
Interests in Subsidiaries and Associates (Section 9 .14,15)

3. Note Worthy
Puttable Instruments may be Equity if certain conditions met. In particular that the amount redeemed is pro-rata share of the net assets on liquidation.
Puttable option is where the holder has the right to get the issuer to redeem or repurchase the instrument.

4. Definition of Financial Liability
A contractual obligation;
To deliver cash or another financial asset to another entity; or
To exchange financial assets or liabilities with another entity under conditions that are financially unfavourable to the entity.
A contract that will or may be settled in the entity’s own equity instruments and;
Under which the entity is or may be obliged to deliver a variable number of the entity’s own equity instruments

5. Equity
Equity is the residual interest in the assets of an entity after
deducting all it’s liabilities.
Equity includes investments by the owners of the entity as well
as increases through Retained Earnings less reductions through
losses & Distributions to the owners.
Equity Instruments are measured at the Fair Value of the cash or other resources received, net of direct costs of issuing the equity Instruments.
If payment is deferred, the time value of money should be taken into account in initial measurement if material.

6. Classification of Certain Instruments;
Some instruments that meet the definition of a Liability are
classified as Equity because they represent the Residual interest
in the net assets of the entity.
Puttable Instrument
Other Financial Instruments

7. Puttable Instrument
A puttable instrument is a Financial Instrument that;
gives the holder the right to sell that instrument back to the Issuer for cash or other financial asset or
Is automatically redeemed or repurchased by the Issuer on the occurrence of an uncertain future event or on the death or retirement of the holder.

8. Puttable Instrument is Equity if all of the following apply!
It entitles the holder to a pro rata share of the net assets on liquidation &
It is a class of Instrument that is subordinate to all other classes of instruments &
All financial instruments in the class of instruments that is subordinate to all other classes of instruments have identical features &
Apart from the contractual obligation for the issuer to redeem the instrument for cash or other financial asset, the instrument does not include any contractual obligation to deliver cash or other financial asset to the another entity. &
The total expected cash flows attributable to the instrument over the life of the instrument are based substantially on the profit & loss, & the change in recognized net assets.

9. Other Instruments are Equity;
Instruments or components of Instruments, that are subordinate to all other classes of instruments are classified as Equity if they impose on the entity an obligation to deliver to another party a pro-rata share of the net assets of the entity only on liquidation.

10. Examples of Equity or Liability
A puttable Instrument is Equity if it receives a pro-rata share of the net assets measured in accordance with this FRS. If on some other basis, then it is classified as a Liability.

11. Examples of Equity and liability
An Instrument is classified as a Liability, if it obliges the entity to make mandatory payments to the holder before liquidation, such as a mandatory dividend.

12. Examples of Equity or Liability
A Preference share that provides for mandatory redemption by the issuer for a fixed or determinable amount at a fixed or determinable future date,
or gives the holder the right to require the issuer to redeem the instrument on or after a particular date for a fixed or determinable amount is a Liability

13. Examples of Equity or Liability
Members Shares in a Co-operative entities are Equity if;
The entity has an unconditional right to refuse redemption of the members shares or
Redemption is unconditionally prohibited by local law, regulation or the entity’s governing charter.

14. Convertible Debt Split Accounting
Recognize Liability as the Fair Value of a similar liability that does not have a conversion option.
The residual amount of the proceeds shall be recognized as Equity.
Transaction Costs shall be allocated between the Debt and Equity based on their relative Fair Values

15. Treasury shares
Treasury Shares are equity instruments of the entity that have been issued and subsequently reacquired by the entity. An Equity shall deduct from Equity the fair value of the consideration given for the treasury shares. The entity shall not recognize a gain or loss on the repurchase, sale, issue or cancellation of treasury shares.

16. Distributions to owners
An entity shall reduce Equity for the amount of distributions to it’s owners. An entity shall disclose the fair value of any non cash assets that have been distributed to it’s owners during the reporting period