Butter Co issues 50m 6% preference shares at par on 1/1 / 20X0. The shares carry a contractual obligation to be redeemed at a 10% premium in 5 years time. According to IFRS Standards how should the shares be initially recognized in the financial statements on 1/20 / 20X0?

1/ As a financial liability of 55m

2/As a financial liability of 50m

3/As an equity instrument of 55m

4/As an equity instrument of 50m