Section A: Theory and Conceptual Understanding $(20$ marks$)$

$1.$ Define a compound financial instrument according to IAS $32.$ Explain the accounting treatment for the equity and liability components of a compound financial instrument.

$(5$ marks$)$

$2.$ Describe the key differences between financial liabilities and equity instruments under IAS $32.$ Provide examples to illustrate your answer.

$(5$ marks$)$

$3.$ Discuss the criteria used to determine whether a financial instrument should be classified as equity or a financial liability. What are the implications of misclassifying these instruments?

$(5$ marks$)$

$4.$ Explain the concept of "substance over form" in the context of IAS $32$ and its importance in the classification of financial instruments.

$(5$ marks$)$