How are deferred shares recognized in financial statements?

Deferred shares are recognized at fair value, which reflects their current worth in the market at the time of reporting. This method of recognition provides a more accurate representation of the company’s financial position, as it considers the present value of future cash flows related to those shares. However, in the context of the provided options, the phrase "ignoring any fair value changes" can imply that once the fair value is determined, it does not change in subsequent periods, which is specific to how deferred shares are being recognized and valued over time.

The primary aim of recognizing deferred shares at fair value is to offer shareholders and stakeholders a relevant and meaningful insight into the company’s equity situation, as it aligns the financial reporting with the current economic realities faced by the organization.