Treatment of embedded derivatives on first-time adoption?
How are embedded derivatives treated on first-time adoption?
As per Ind AS 101, the assessment of embedded derivative that requires to be separated from the host contract and accounted for as a derivative should be based on the conditions that existed on the date when the entity first became a party to the contract. Subsequent reassessment is prohibited unless there is change in the terms of the contract having a potential to modify the cash flows. The first-time adopter can make assessment regarding embedded derivative on the date when such a reassessment is required.