Page 20 - Ebook Financial Accounting 3

CHAPTER 2.0

EQUITY SHARES: MFRS 7, MFRS 9, MFRS 132 (MFRS 17-

EFFECTIVE 1.1.2020) & MFRS 139

LEARNING OBJECTIVE:

At the end of this chapter, students should be able to:

● Give the overview of equity

● Describe the terminology used to identify different amounts of share capital
● Explain the procedure of issuance of equity shares

● Provide the methods of payment in the issuance of equity shares
● Provide the explanation on the nature of forfeiture of shares and reissuance of forfeited

shares

● Provide the explanation on the nature of Bonus Share, Pre-Emptive Right to New
Shares (Right Issue) and Conversion of Preference Shares

Introduction

MFRS 132 states a financial instrument is any contract that gives rise to a financial asset of one

entity and a financial liability or equity instrument of another entity. The objective of this

Standard is to establish principles for presenting financial instruments as liabilities or equity
and for offsetting financial assets and liabilities. An equity share, normally known as ordinary

share is a part ownership where each member is a fractional owner and initiates the maximum
entrepreneurial liability related to a trading concern. These types of shareholders in any

organization possess the right to vote.

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