Search found 80 matches

by DJP
22 Jul 2021, 18:26
Forum: IFRS-related topics
Topic: Financial Assets Classification for Mutual Fund
Replies: 5
Views: 64

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: 186

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: 186

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: 186

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: 186

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: 186

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: 136

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: 348

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: 111

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: 348

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: 348

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: 348

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: 143

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: 143

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.
by DJP
06 May 2021, 12:15
Forum: IFRS-related topics
Topic: OCI Impact on CF
Replies: 7
Views: 143

Re: OCI Impact on CF

No worries. Why do you say IAS 7.28 relates only to FX changes on cash equivalents? If you read paragraph 27 you will see that cash flows should be reported in a manner consistent with IAS 21. IAS 7 does not address cash equivalents only. My interpretation of paragraphs 25 ~ 28 of IAS 7 is that any ...
by DJP
06 May 2021, 10:24
Forum: IFRS-related topics
Topic: OCI Impact on CF
Replies: 7
Views: 143

Re: OCI Impact on CF

I presume you are referring to the cash flow statement.

The effect of unrealised FX gains or losses should be reported as a reconciling item separately from operating, investing and financing activities. (IAS 7.28)
by DJP
27 Apr 2021, 08:42
Forum: IFRS-related topics
Topic: Shares issued along with warrants
Replies: 9
Views: 158

Re: Shares issued along with warrants

Yup, I believe your DR and CR are the other way round, but I agree with that view too. Thanks!
by DJP
26 Apr 2021, 17:32
Forum: IFRS-related topics
Topic: Shares issued along with warrants
Replies: 9
Views: 158

Re: Shares issued along with warrants

A question related to this question from the investor's point of view: If all existing investors receive warrants on their existing stock holding, would the warrant be recognised as a derivative financial asset (DR) against P&L (CR), or should the CR be booked instead as decrease in the stock holdin...
by DJP
28 Mar 2021, 19:22
Forum: IFRS-related topics
Topic: Derivate floor
Replies: 11
Views: 233

Re: Derivate floor

It makes sense that you have a value different from zero because this is an option. You are buying protection. But in order to advice on the accounting you need to explain the scenario and product clearly.
by DJP
28 Mar 2021, 08:40
Forum: IFRS-related topics
Topic: Derivate floor
Replies: 11
Views: 233

Re: Derivate floor

Jonny, can you please try to explain this arrangement in a clearer way? There should be no day-1 loss, so your proposed accounting treatment is not correct. And you can only book fair value changes in OCI if you are applying hedge accounting.
by DJP
27 Mar 2021, 13:12
Forum: IFRS-related topics
Topic: IAS 21 Monetary and Non-monetary items
Replies: 8
Views: 170

Re: IAS 21 Monetary and Non-monetary items

It's not only fact that you can determine fair value. Is the combination of you being able to determine the fair value and having the right or the obligation to pay units of currency in the amount that you have determined (i.e. fair value)
by DJP
27 Mar 2021, 12:48
Forum: IFRS-related topics
Topic: IAS 21 Monetary and Non-monetary items
Replies: 8
Views: 170

Re: IAS 21 Monetary and Non-monetary items

Financial derivative contracts are definitely monetary items. You can determine their fair value, which is the number of units of currency that you have the right to receive or the obligation to deliver. Given that derivative are carried at FVTPL, the FX component should already be factored in the f...
by DJP
27 Mar 2021, 12:40
Forum: IFRS-related topics
Topic: Derivate floor
Replies: 11
Views: 233

Re: Derivate floor

Why do you say this is a swap?

The scenario is not very well described, but it looks like a floor to me.
by DJP
26 Mar 2021, 15:42
Forum: IFRS-related topics
Topic: Derivate floor
Replies: 11
Views: 233

Re: Derivate floor

I am not sure if I clearly understand your derivative. In any case, a floor is protection that you buy. Either it is a purchased put option in case you are long on the underlying, or a purchased call option in case you are short on the underlying. In order to calculate its fair value, you will have ...
by DJP
25 Mar 2021, 17:17
Forum: IFRS-related topics
Topic: POST DATED CHEQUE UNDER IAS 37 QUESTION
Replies: 8
Views: 207

Re: POST DATED CHEQUE UNDER IAS 37 QUESTION

Not quite. A 3-month deposit is a financial asset that you acquire. Basically an investment that meets the requirements in IAS 7.7 The cheque in this example is a financial asset that you receive in turn for the provision of services or the sale of goods. It is a receivable. Otherwise an Accounts Re...
by DJP
25 Mar 2021, 10:57
Forum: IFRS-related topics
Topic: POST DATED CHEQUE UNDER IAS 37 QUESTION
Replies: 8
Views: 207

Re: POST DATED CHEQUE UNDER IAS 37 QUESTION

mmm....not sure about that. Bills receivable are usually reported under trade and bills receivable. A cash equivalent is defined as an "investment" blablabla, but in this case you are not "investing" in the bills receivable. You are receiving this financial asset in return for the provision of a ser...
by DJP
24 Mar 2021, 15:38
Forum: IFRS-related topics
Topic: POST DATED CHEQUE UNDER IAS 37 QUESTION
Replies: 8
Views: 207

Re: POST DATED CHEQUE UNDER IAS 37 QUESTION

I would show this as a bill receivable. 3 months seems too long to be a simple reconciling item on the bank.
by DJP
04 Mar 2021, 10:43
Forum: IFRS-related topics
Topic: IAS 32 Compound Instrument - Debit balance in equity
Replies: 10
Views: 259

Re: IAS 32 Compound Instrument - Debit balance in equity

Correct. The market rate should be adjusted for the issuer's credit risk. For this transaction to make sense, that credit risk must be quite high.
by DJP
03 Mar 2021, 09:38
Forum: IFRS-related topics
Topic: Interest rate swap on debt
Replies: 24
Views: 508

Re: Interest rate swap on debt

Hi Leo, The objective of a fair value hedge is that the fair value changes on your hedged item (the fixed-rate borrowing) are compensated by the fair value changes on your hedging instruments (the IRS). You are right when you say that what you are trying to achieve is a zero change in fair value, bu...