When initially recognising the liability and equity components of a compound financial instrument, gains and losses arise and must be recogniseD.

Question

Quizplus · Accepted Answer

When initially recognizing the liability and equity components of a compound financial instrument, no gains or losses are recognized. The instrument is split into its liability and equity components based on their fair values at the time of issuance.

When Initially Recognising the Liability and Equity Components of a Compound