Jane Co. has in its financial statements three classes of shares that are identified as A1 shares, A2 shares and A3 shares.

A1 shares are ordinary shares and have been classified correctly as equity.

A2 shares are redeemable, but not mandatorily, and contain an option which will allow Jane Co. to repurchase them. Dividends are payable on the A2 shares if and only if they are paid on the A1 shares. The terms of the A2 shares are such that dividends are payable at a rate equal to that of the A1 shares.

Two million of the A3 shares of nominal value of $1 each are in issue. They are redeemable in two years' time. Jane Co. has a choice regarding the method of redemption of the A3 shares. They may be redeemed at their nominal value for cash or one million A1 shares may be issued in settlement. A1 shares are currently valued at $10 per share. The lowest price for Jane Co.'s A1 shares since its formation has been $5 per share.

Required:

Discuss, with suitable calculations where needed, how the above financial instruments should be accounted for in the financial statements of Jane Co. You should refer to the relevant standards and conceptual framework as part of your answer.