According to AASB 132 Financial Instruments: Presentation, which of the following items would be regarded as a financial liability?
A) Ordinary shares held in another entity.
B) A contractual right to exchange under potentially favourable conditions, an option to purchase shares below the market price.
C) The right of a depositor to obtain cash from a financial institution with which it has deposited cash.
D) A contract that is a non-derivative for which the entity is obliged to deliver a variable number of its own equity instruments.

Question

Quizplus · Accepted Answer

A financial liability is defined as a contractual obligation to deliver cash or another financial asset to another entity or a contract that will or may be settled in the entity's own equity instruments in a way that is potentially unfavourable to the entity. Option D, a contract that obliges an entity to deliver a variable number of its own equity instruments, fits this definition because it could lead to an outflow of economic benefits from the entity. Options A, B, and C do not meet the criteria for a financial liability as defined by AASB 132.

According to AASB 132 Financial Instruments: Presentation, Which of the Following