Question
Beta invested 15% ordinary shares in Digital Hub Ltd (DHL). DHL is a start-up in the business of research and development of robotic process automation.
Beta invested 15% ordinary shares in Digital Hub Ltd (DHL). DHL is a start-up in the business of research and development of robotic process automation. After Beta acquiring its shares in April 2020, DHL reached a breakthrough in product development earlier than initially expected. Beta has high hope on receiving good return in terms of dividend and no intention to sell. Beta's investment in DHL does not give Beta the control, joint control or significant influence over DHL and Beta has no intention to increase the shareholding in DHL.
Please explain the possible classification of the equity instruments in DHL to be accounted for in the financial statements of Beta. You are required to define the rule to determine the classification with reference to HKFRS 9 "Financial Instruments".
Thank you!
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