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I would agree with the alternative treatment if this was an entity under common control, but that doesn't seem to be the case. This is an associate. I'm not sure if it would be appropriate to consider the waiver as a an increase in the investment in the associate. Also, even if that treatment was ac...

This is a modification and the impact should be taken immediately to P&L. Thus, your suggested entries are correct. However, you need to understand why the investor is waiving interest, because that will have implications going forward on how to determine the expected credit loss on this loan. I...

Hi mchris15,

That will be defined in the contract.

Hi Kieran -- to answer your question, I would take a practical approach here and take those monthly fees straight to P&L.You may want to do a couple of simulations and calculations to prove that the difference is immaterial compared to using the effective interest method.

A loan commitment is indeed the undrawn part of a credit facility. The drawn portion is a financial instrument accounted for under IFRS 9. From experience, and apart from sophisticated banks, most entities amortise transaction costs on a straight line basis as a proxy to the effective interest rate....

A controls B, so in theory it can make B sell it's 70% stake in C to A, unless there are indeed any legal impediments.

Hi Leo,

Your conclusion doesn't make sense. In order to get full control of the group comprising A, B and C, A needs to buy from D the 49% stake in B.

Hi,

If this is equity settled, why would you show it in the cash flow statement? It should be a movement in reserves shown in the SOCIE.

Good reference, Marek. Thanks!!

If you meet all these criteria, it is a cash equivalent: - short-term nature (i.e. readily convertible to a known amount of cash) - subject to insignificant changes in value - the purpose is to meet short-term cash commitments (i.e. it is used for cash management purposes rather than for investment ...

This may require a few discussions between management and auditors, but you can also make the case that the balances in the cash pool are a cash equivalent, as it meets the definition in IAS 7. If you conclude that it does not meet the definition of a cash equivalent, then these are I/C balances, as...

It should be in financial assets at amortised cost. Although 'Trade receivables' is also a financial asset, it is a separate category required by IAS 1.

There is no such thing as "positive provisions" for financial liabilities.

You first need to understand why your creditors are not claiming payment for these trade payables. You can only derecognise them if settled or legally released.

The cheques are merely a payment method. You don't have to disclose them. Similarly, if you have a standing order with a bank (like a direct debit) to make a specific payment every month, you don't have to disclose that either. Your commitment -- the lease liability -- is already recognised and disc...

It should be classified as current because it seems that the entity does not have the right at the end of the reporting period to defer settlement for more than 12 months after the reporting period.

It looks like X controls the account where those funds are deposited. Therefore, X will have to recognise those funds while they are sitting in the 'corporate account'.

I think it really depends on the voting rights you get if you convert the pref shares and accumulated PIK dividends. If those voting rights give you access to the same returns as those of ordinary shareholders, then you should account for the instruments using the equity method, according to paragra...

When you dispose of the subsidiary, you are selling its net assets (which will include the borrowing). Assuming you disposed of the sub for cash, you should have a cash inflow in your investing activities in the consolidated cash flow statement.

I would say financial liability in its entirety. IAS 32 para 26

PD (associate's probability of default) x LGD (100% in this case) x shares' maket value

The transaction seems to meet the definition of a financial guarantee. When measuring the guarantee, you should take into consideration the probability of default of the associate and the value of the shares (which in this case seems to be your exposure at default). At initial recognition you recogn...

"in case of associate's default, the Parent is obliged to sell the stake on the open market and paid off the associate's liability."

Is the parent responsible to pay the whole liability or just to transfer the shares in the sub in case of default?

In the consolidated accounts you only have the building (PPE). All intra-group transactions are eliminated in the consolidation process.

Hi Kevin, Yes, the tax effect is usually deferred taxation. But please mind that gains and losses in the income statement may also give rise to deferred taxes. That is because income taxes follow local tax rules and it is often the case that tax accounting rules are different from financial accounti...

I've come across this paper:

https://aossg.org/docs/aossg%20publicat ... n-IFRS.pdf

End of the day we both agree on the entries, and that's what matters :) I still think IAS 37 applies to the performance guarantee because this is an agreement you have with a party other than your customer, and as such you ought to disclose the guarantee as part of your contingent liabilities disclo...

While I fully understand your arguments that a performance guarantee could be seen as some sort of penalty to be considered as variable consideration, I am not sure if this would lead to the best accounting treatment. Even though it is possible that a guarantee can be executed, it would make no sens...

That is an interesting view, but in my opinion performance guarantees should follow "warranty accounting" and be scoped out of IFRS 15 (based on IFRS 15 BC60).

This is the same as in many other performance guarantees. If ABC Co does not deliver or perform under the contract it has with its customer, the customer may activate the guarantee, in which case the bank will pay a certain amount to the customer (defined in the guarantee contract) and claim that am...

It is a contingent liability. Contingent liabilities shall be disclosed, unless remote (or immaterial). You may want to disclose the total amount of the bank performance guarantee facilities that are outstanding as at the reporting date.