IFRScommunity.com

If the loan commitment is determined to be outside the scope of IFRS 9, the ECL requirements would still apply to the loan commitments per IFRS 9.2.1(g) '..however, an issuer of loan commitments shall apply the impairment requirements of this Standard to loan commitments that are not otherwise withi...

Yes, it will be a loan commitment. Does this mean when the loan draws down (which will be the initial recognition point for the loan), it will meet the requirement of the Standard that the financial asset should initially be recognised at its fair value if the rate agreed in advance was the market r...

Thanks for the quick response.

A loan may use a rate booked in advance, so it may not be based on the rate that would have applied on initial recognition.

Yes Marek, that is correct.

to use it as a discount rate for the net present value calculations

A scenario is that the instrument is measured at amortised cost. As per IFRS 9, on initial recognition, the instrument needs to be measured at fair value, and it is established that the transaction price is not equal to fair value, so according to IFRS 9.B.5.1.2A(b), the transaction price will be ad...

The instrument is measured at fair value through profit or loss.

It is not clear what is the intrinsic rate - will it be the risk-free rate without the margin or with the margin? Is there any guidance on this?

My query relates to the intrinsic rate to the financial instrument - say a contract charges interest based on the risk-free rate plus a margin; what would be the intrinsic rate to the financial instrument - will it be the risk-free rate without the margin or with the margin?

Thanks in advance.

Thank you all for your helpful responses.

Thanks all, I will check the contractual arrangement in detail.

An entity is due to make a payment, so recognise a payable which gets cleared when the cash payment is subsequently made. The debit side should be an asset, as once the payment has been made, the entity has a right to recover its amount from a counterparty. My question is where would the debit entry...

Can you provide details on the terms of this fee? Also, could you clarify the reason for paying it even though the loan was not actually taken out? The loan is expected to be drawn later in the drawing period, but the origination fee is paid upfront, which is part of the loan's carrying value. In e...

Have a query about the carrying value of a loan, which is classified and measured at amortised cost under IFRS 9. Suppose there is a loan on which a borrower pays the origination fee to the lender, and it is already determined that the origination fee is an integral part of the effective interest ra...

Thanks, Ketan. That's very helpful.

I do have follow-up questions. - Is the incremental ECL value added to the unamortised deferred premium? For instance, if the unamortised deferred premium is £500 and ECL is £700, is it £200 that gets added to the deferred premium to reflect the FG liability at £700? or is the entire deferred premiu...

Ketan, I have started a new post, thanks

I have a query in relation to financial guarantee liability accounting. At initial recognition – a financial guarantee is initially recognised at FV, producing entries: Debit: Premium receivable/Cash Credit: Financial guarantee liability (in this case, unamortised deferred premium) Subsequent measur...

I have a query in relation to financial guarantee accounting. At initial recognition – a financial guarantee is initially recognised at FV, producing entries: Debit: Premium receivable/Cash Credit: Deferred Premium Subsequent measurement – it is measured at the higher of: - IFRS 9 ECL on the financi...

Hi Everyone,

Does anyone have any examples of using indices or suitable model to revalue the intangible assets in accordance with IAS 38?

thanks

thanks @pub_acco Can I please just clarify one further point - why would the IASB not talk about the FVTPL measurement basis. All the Phase 2 reform papers, articles and discussions seem to be focused on the changes to basis for determining the contractual cash flows (which appears to be only releva...

Thanks @exIFRS and @pub_acco The LIBOR, the debtor is paying to the bank on the underlying debt, could have an impact on the financial guarantee carrying amount, right? I mean, IFRS 9 says the subsequent measurement of the financial guarantees is at the higher of: - the amount of the loss allowance,...

Thank you all for your responses so far. What I am hoping to clarify is that under IASB project - Interest rate benchmark reform, there is a practical expedient (Phase 2 amendments in paragraphs 5.4.5–5.4.9 of IFRS 9) that an entity shall apply para B5.4.5 (see below for the paragraph itself) which ...

The subsequent measurement of FG contracts are measured at the higher of:

• The amount of the loss allowance, and
• The amount initially recognised less cumulative amortisation, where appropriate.

Would the EIR not be used in the cumulative amortisation?

Amendments to IFRS 9 Financial Instruments were issued in Aug 2020 (these should be available from IFRS website) and in there para 5.4.7 says: As a practical expedient, an entity shall apply paragraph B5.4.5 to account for a change in the basis for determining the contractual cash flows of a financi...

Is it possible to see an example where EIR is calculated for a financial guarantee issued at arm's-length? Also, the subsequent measurement of FG contracts are measured at the higher of: • The amount of the loss allowance, and • The amount initially recognised less cumulative amortisation, where app...

Recently IASB published amendments to IFRS 9 Financial Instruments where it talks about the practical expedient for financial instruments measured at amortised cost (para 5.4.5. to 5.4.9), however what would happen if the financial instrument such as financial guarantee is measured at FVTPL, will th...