Wedding Cake Ltd. has its shares listed on a securities exchange. It has entered a contractual agreement to issue $10 million of its ordinary shares to Island Ltd. in two years time. The number of shares to be ultimately issued will depend on the market price of the shares in two years time. Should Wedding Cake Ltd. recognise a financial liability or an equity instrument in relation to this agreement?
Wedding Cake Ltd. has its shares listed on a securities exchange. It has entered a contractual agreement to issue $10 million of its ordinary shares to Island Ltd. in two years time. The number of shares to be ultimately issued will depend on the market price of the shares in two years time. Should Wedding Cake Ltd. recognise a financial liability or an equity instrument in relation to this agreement?
Chapter1: Financial Statements And Business Decisions
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Wedding Cake Ltd. has its shares listed on a securities exchange. It has entered a contractual agreement to issue $10 million of its ordinary shares to Island Ltd. in two years time. The number of shares to be ultimately issued will depend on the market price of the shares in two years time. Should Wedding Cake Ltd. recognise a financial liability or an equity instrument in relation to this agreement?
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