Put Option: 3 Years or 5 Years? | CA Final FR May 2026 | ICAI Suggested Answer Explained

3 Years or 5 Years for Liability Valuation? — Put Option Explained 📄 Download Expected questions, Top 100 questions List, Amendment notes, FR Revision Planner 📲 WhatsApp Channel: 📲 Telegram Channel: 📲Free Mentorship Group for Nov 26 Exam 🔗 CONNECT WITH CA CHIRANJEEV JAIN 📲 📲 Telegram Channel: 📸 Instagram (Study Updates): 📸 Main Instagram: ▶️ YouTube Channel: 🌐 Course Registration: 📞 For Enquiries: In this video, we discuss an important conceptual doubt arising from the CA Final Financial Reporting May 2026 question on Convertible Debentures with an Embedded Put Option. The key question is: If the debenture is for 5 years but the holder has a right to demand repayment after 3 years, should the liability component be calculated using 3-year or 5-year cash flows? In this video, we discuss: * Whether the holder’s Put Option means that repayment will definitely happen after 3 years * Why Right to Exercise ≠ Certainty of Exercise * How the embedded put option affects the liability component * What is meant by a similar non-convertible instrument * When the 5-year cash flows can be considered * What happens if the fair value of the put option is separately given * Why the fair value of the put option cannot simply be assumed to be NIL * Difference between the 5-year approach and ICAI’s 3-year approach * How to approach this question from an examination point of view * What students should follow in the CA Final examination #CAFinal #CAFinalFR #FinancialReporting #IndAS32 #PutOption #ConvertibleDebentures #EmbeddedDerivative #CAExam #CAFinalMay2026 #ICAI #FRRevision #CAChiranjeevJain #IndAS #CAStudents #FinancialReportingRevision