Search found 95 matches

by DJP
27 Sep 2021, 16:47
Forum: IFRS-related topics
Topic: when take a below-market loan partially, how the discount is calculated
Replies: 4
Views: 59

Re: when take a below-market loan partially, how the discount is calculated

You shall determine the rate when you sign the contract. Then you recognise the discount only at the time of each withdrawal. But first, I would check: 1) is the difference immaterial? 2) are the loans repayable on demand? If the answers to either 1 or 2 are affirmative, most likely you don't have t...
by DJP
27 Sep 2021, 12:31
Forum: IFRS-related topics
Topic: when take a below-market loan partially, how the discount is calculated
Replies: 4
Views: 59

Re: when take a below-market loan partially, how the discount is calculated

When you sign the contract you should determine what the relevant rate is. For that you should look at market rates for the relevant repayment dates and credit risk of the counterparty. Your transfer pricing department (in case you have one) should be able to support you with determining the discoun...
by DJP
27 Sep 2021, 09:50
Forum: IFRS-related topics
Topic: Translation difference on consolidation
Replies: 1
Views: 22

Re: Translation difference on consolidation

Hello, Not sure if I understand your question. But what you should do when you translate a foreign subsidiary into the presentation currency is as follows: STEP 1: 1) translate assets and liabilities (excluding goodwill) at the reporting date's rate 2) translate P&L at the period's average rate (or ...
by DJP
24 Sep 2021, 16:03
Forum: IFRS-related topics
Topic: Asset received for free usage from parent who remains with the ownership
Replies: 10
Views: 110

Re: Asset received for free usage from parent who remains with the ownership

The length of time is a judgment that management will have to make. What I was trying to point out is that what they are getting is the right of use of an asset, not the asset itself.
by DJP
24 Sep 2021, 09:55
Forum: IFRS-related topics
Topic: IFRS 15 and IAS 28, Revenue to the associate
Replies: 10
Views: 95

Re: IFRS 15 and IAS 28, Revenue to the associate

The question is the amount of revenue that you are recognising on the sale from A to B. If you are buying back some of those properties, then the revenue recognised on the sales from A to B should perhaps be adjusted to reflect that.
by DJP
24 Sep 2021, 09:31
Forum: IFRS-related topics
Topic: IFRS 15 and IAS 28, Revenue to the associate
Replies: 10
Views: 95

Re: IFRS 15 and IAS 28, Revenue to the associate

no, I am saying the same as pub_acco
by DJP
24 Sep 2021, 09:23
Forum: IFRS-related topics
Topic: IFRS 15 and IAS 28, Revenue to the associate
Replies: 10
Views: 95

Re: IFRS 15 and IAS 28, Revenue to the associate

You don't have to have a promise to buy back, but if that's what happens in practice, that's how you should account for it.
by DJP
24 Sep 2021, 09:19
Forum: IFRS-related topics
Topic: Asset received for free usage from parent who remains with the ownership
Replies: 10
Views: 110

Re: Asset received for free usage from parent who remains with the ownership

How material is this? If material, in my opinion this should be recorded as a lease. You would recognise the right of use of the asset (for its market value) against a liability. Since you are not planning to pay the liability, that could be considered an equity contribution. This is just a thought....
by DJP
31 Aug 2021, 14:17
Forum: IFRS-related topics
Topic: FX embedded derivatives in executory contracts
Replies: 4
Views: 12950

Re: FX embedded derivatives in executory contracts

Ok, I think you have a point there. Thanks!
by DJP
31 Aug 2021, 10:15
Forum: IFRS-related topics
Topic: FX embedded derivatives in executory contracts
Replies: 4
Views: 12950

Re: FX embedded derivatives in executory contracts

mmm... in my opinion the value of the options should not be recorded as part of revenue. The options basically represent protection purchased or sold against movements in the FX rates. To me what makes sense is to record revenue according to the forward rate as at the purchase order date (when the v...
by DJP
26 Aug 2021, 17:30
Forum: IFRS-related topics
Topic: FX embedded derivatives in executory contracts
Replies: 4
Views: 12950

FX embedded derivatives in executory contracts

Hello everyone, Was wondering if you have experience with executory contracts that include FX clauses. Take for example a master sales agreement where the price of an equipment normally priced in a foreign currency is agreed to be sold at a certain FX rate (according to market rates at the time the ...
by DJP
29 Jul 2021, 16:25
Forum: IFRS-related topics
Topic: Net investment hedging ineffectiveness
Replies: 3
Views: 3749

Re: Net investment hedging ineffectiveness

Ok, I can follow and understand the argument. Makes sense.

Now, could you see this as a change in the risk management objective, in which case the hedge relationship would have to be terminated, or simply an overhedge where ineffectiveness will have to be booked going forward?
by DJP
29 Jul 2021, 11:27
Forum: IFRS-related topics
Topic: Net investment hedging ineffectiveness
Replies: 3
Views: 3749

Net investment hedging ineffectiveness

Hello all, Wondering if you have experience with net investment hedges, namely with cases where the net investment is reduced to an amount below the designated hedged amount due to losses on the net investment. In order to determine ineffectiveness in those cases I guess you need to build a new hypo...
by DJP
28 Jul 2021, 09:54
Forum: IFRS-related topics
Topic: Error or Accounting estimate
Replies: 21
Views: 15624

Re: Error or Accounting estimate

My two cents' worth: if an engagement letter is not signed, and no audit work has been performed, recognising an expense does not seem correct.
by DJP
22 Jul 2021, 18:26
Forum: IFRS-related topics
Topic: Financial Assets Classification for Mutual Fund
Replies: 5
Views: 3253

Re: Financial Assets Classification for Mutual Fund

Are you talking about the accounting for the bond in the fund, or the accounting for the unit of participation in the fund?
by DJP
17 Jun 2021, 12:33
Forum: IFRS-related topics
Topic: Parental guarantee on outstanding debt
Replies: 12
Views: 7349

Re: Parental guarantee on outstanding debt

all parties are under common control (including the lenders).

so yes, there is an expectation that the parent will provide liquidity for the borrower to make good its loan commitments, and it is highly expected that this will be the case given that the borrower lost a big project.
by DJP
17 Jun 2021, 10:19
Forum: IFRS-related topics
Topic: Parental guarantee on outstanding debt
Replies: 12
Views: 7349

Re: Parental guarantee on outstanding debt

Not an option :)

I guess I am just trying to understand whether this commitment by the Parent creates a constructive obligation, like pub_acco is suggesting.
by DJP
16 Jun 2021, 16:48
Forum: IFRS-related topics
Topic: Parental guarantee on outstanding debt
Replies: 12
Views: 7349

Re: Parental guarantee on outstanding debt

What if the parent knows already that it will have to reimburse the sub because the sub lost a project and cannot repay the loan to the lender?
by DJP
16 Jun 2021, 10:24
Forum: IFRS-related topics
Topic: Parental guarantee on outstanding debt
Replies: 12
Views: 7349

Re: Parental guarantee on outstanding debt

Thanks, guys. This is helpful. @Marek - the investment is fully impaired @pub_acco - I'm not sure if this can be seen as a financial instrument because you don't really have a contract. You have a letter (commitment) from the parent to the sub. I believe this should be treated under IAS 37 rather th...
by DJP
14 Jun 2021, 14:08
Forum: IFRS-related topics
Topic: Parental guarantee on outstanding debt
Replies: 12
Views: 7349

Parental guarantee on outstanding debt

Hello everyone, A guarantee provided from a Parent to a Sub, where the Parent commits to provide the necessary funds to the Sub to repay its debts, is not a financial guarantee because the lender is not a part to the contract. How would you account for this guarantee in case it is highly expected th...
by DJP
27 May 2021, 11:31
Forum: IFRS-related topics
Topic: Associate accounting
Replies: 7
Views: 1009

Re: Associate accounting

and why loss on disposal of associate? is it being sold for nothing?
by DJP
27 May 2021, 11:29
Forum: IFRS-related topics
Topic: Above-par instruments and current/non-current distinction
Replies: 19
Views: 9460

Re: Above-par instruments and current/non-current distinction

Cash flows should dictate this classification. Is part of the loan being repaid within 12 months? If so, that part should be classified as current. Or... do you plan to sell the loan within 12 months, or is there an expectation that the borrower will prepay the loan? If so, the entire loan should be...
by DJP
21 May 2021, 17:39
Forum: IFRS-related topics
Topic: Amortization of of pre paid arranging fees
Replies: 2
Views: 663

Re: Amortization of of pre paid arranging fees

The fees are an integral part of the borrowing, so you should debit the financial liability account, i.e. you should not present the fees as an asset.
by DJP
08 May 2021, 11:18
Forum: IFRS-related topics
Topic: Above-par instruments and current/non-current distinction
Replies: 19
Views: 9460

Re: Above-par instruments and current/non-current distinction

It's not really about negative assets or negative liabilities, I think. An asset with such a huge premium like in the example is basically an asset with a negative return (pretty much like a EUR deposit these days). Surely whoever buys this asset has an economic objective that will meet the conditio...
by DJP
08 May 2021, 00:49
Forum: IFRS-related topics
Topic: Above-par instruments and current/non-current distinction
Replies: 19
Views: 9460

Re: Above-par instruments and current/non-current distinction

It should be the actual cash to be received discounted at the EIR
by DJP
07 May 2021, 10:52
Forum: IFRS-related topics
Topic: Above-par instruments and current/non-current distinction
Replies: 19
Views: 9460

Re: Above-par instruments and current/non-current distinction

Realise means conversion in cash or cash equivalents (as implicitly stated in IAS 1.68). My view is that if the asset will be realised (converted into C&CEs), the timing of the cash flow should indicate whether the asset is current or non-current. If no cash flow is involved in the future (e.g. defe...
by DJP
06 May 2021, 16:23
Forum: IFRS-related topics
Topic: OCI Impact on CF
Replies: 7
Views: 1924

Re: OCI Impact on CF

Agree.

However, when the separate SCFs are translated at average rates, the C&CEs' opening and closing balances in presentation currency will not reconcile. In my view that difference is included as a FX differences "plug". This is what I have seen in practice.
by DJP
06 May 2021, 13:46
Forum: IFRS-related topics
Topic: OCI Impact on CF
Replies: 7
Views: 1924

Re: OCI Impact on CF

Cash flows are the reconciling items between the opening and closing balance of the cash and cash equivalents balances. Any difference caused by the application of IAS 21 needs to be "plugged" into the SCF to bridge the opening and closing balances.