Document ID: chunk:federal_register_of_legislation:F2023C00406:body:0:p57
Version: federal_register_of_legislation:F2023C00406
Segment Type: other
Provision Reference: 
Character Range: 143894–147697

option. Similarly to (a) and (b) above, the exercise price per share is fixed at CU98. Accordingly, Entity A has an obligation to pay CU98,000 in cash to Entity B (CU98 × 1,000) in exchange for 1,000 of Entity A's outstanding shares, if Entity B exercises its option. Entity A records the following journal entries.

1 February 20X2
Dr  Cash  CU5,000
    Cr    Equity      CU5,000

To recognise the option premium received of CU5,000 in equity.
Dr  Equity  CU95,000
    Cr      Liability     CU95,000

To recognise the present value of the obligation to deliver CU98,000 in one year, ie CU95,000, as a liability.

31 December 20X2
Dr  Interest expense  CU2,750
    Cr                Liability     CU2,750

To accrue interest in accordance with the effective interest method on the liability for the share redemption amount.

31 January 20X3
Dr  Interest expense  CU250
    Cr                Liability     CU250

To accrue interest in accordance with the effective interest method on the liability for the share redemption amount.
On the same day, Entity B exercises the put option and the contract is settled gross. Entity A has an obligation to deliver CU98,000 in cash to Entity B in exchange for CU95,000 worth of shares (CU95 × 1,000).
Dr  Liability  CU98,000
    Cr         Cash         CU98,000

To record the settlement of the option contract.

(d) Settlement options
IE31 The existence of settlement options (such as net in cash, net in shares or by an exchange of cash and shares) has the result that the written put option is a financial liability. If one of the settlement alternatives is to exchange cash for shares ((c) above), Entity A recognises a liability for the obligation to deliver cash, as illustrated in (c) above. Otherwise, Entity A accounts for the put option as a derivative liability.

Entities such as mutual funds and co-operatives whose share capital is not equity as defined in AASB 132

Example 7: Entities with no equity
IE32 The following example illustrates a format of a statement of comprehensive income and statement of financial position that may be used by entities such as mutual funds that do not have equity as defined in AASB 132. Other formats are possible.
Statement of comprehensive income for the year ended 31 December 20X1
                                                                       20X1      20X0
                                                                       CU        CU
Revenue                                                                2,956     1,718
Expenses (classified by nature or function)                            (644)     (614)
Profit from operating activities                                       2,312     1,104
Finance costs
– other finance costs                                                  (47)      (47)
– distributions to unitholders                                         (50)      (50)
Change in net assets attributable to unitholders                       2,215     1,007

Statement of financial position at 31 December 20X1
                                                                                                                              20X1                  20X0
                                                                                                                   CU         CU         CU         CU
ASSETS
Non-current assets (classified in accordance with AASB 101)                                                        91,374                78,484
Total non-current assets                                                                                                      91,374                78,484
Current assets (classified in accordance with AASB 101)                                                            1,422                 1,769
Total current