Search found 115 matches

by DJP
18 Oct 2021, 09:32
Forum: IFRS-related topics
Topic: Change in depreciation policy-IFRS Adoption
Replies: 16
Views: 849

Re: Change in depreciation policy-IFRS Adoption

hehehhe, good old UK tax system. Basically the new year used to be celebrated around the end of March to mark the beginning of Spring. Then the Romans introduced the Julian calendar and changed the civil year to start on the 1st of January. However, during Medieval ages the date was changed once aga...
by DJP
15 Oct 2021, 16:30
Forum: IFRS-related topics
Topic: Savings prize draw accounts
Replies: 12
Views: 152

Re: Savings prize draw accounts

I'm not convinced. There may not be any fees charged to customers to start with. This looks more akin to a marketing expense to attract funding.
by DJP
15 Oct 2021, 16:04
Forum: IFRS-related topics
Topic: Savings prize draw accounts
Replies: 12
Views: 152

Re: Savings prize draw accounts

It is the bank that is paying for something, not the other way round. So what is the performance obligation?
by DJP
15 Oct 2021, 12:40
Forum: IFRS-related topics
Topic: Savings prize draw accounts
Replies: 12
Views: 152

Re: Savings prize draw accounts

What is the performance obligation though?
by DJP
15 Oct 2021, 09:46
Forum: IFRS-related topics
Topic: IFRS 9 General Question
Replies: 3
Views: 72

Re: IFRS 9 General Question

The discount is part of the loan's amortised cost. Its unwinding is done according do the effective interest method.
by DJP
15 Oct 2021, 08:47
Forum: IFRS-related topics
Topic: IFRS 9 General Question
Replies: 3
Views: 72

Re: IFRS 9 General Question

A loan measured at amortised cost means that any premium/discount and related transaction costs are recognised in P&L using the effective interest rate. The terms used in your question are not part of the IFRS terminology, but to put it simply, the unwinding of a discount is part of the loan amo...
by DJP
14 Oct 2021, 17:59
Forum: IFRS-related topics
Topic: Savings prize draw accounts
Replies: 12
Views: 152

Re: Savings prize draw accounts

You can argue that perhaps a provision needs to be made (IAS 37). In my opinion this is outside the scope of IFRS 9. You don't have a contractual agreement to pay that prize. Plus, if hypothetically all deposits are withdrawn before the prize draw, nothing will ever be paid. This is not a financial ...
by DJP
14 Oct 2021, 09:26
Forum: IFRS-related topics
Topic: Savings prize draw accounts
Replies: 12
Views: 152

Re: Savings prize draw accounts

I am inclined to agree with Marek in that this is not interest. Interest should mostly be compensation for time value and credit risk and this is not the case. I think I would include it in other finance expenses though, instead of a decrease in revenue. Also please note that you don't have a contra...
by DJP
13 Oct 2021, 10:28
Forum: IFRS-related topics
Topic: IFRS 9 - Lifetime Expected Loss - time slices below one year
Replies: 2
Views: 109

Re: IFRS 9 - Lifetime Expected Loss - time slices below one year

It may be appropriate to use shorter term PDs when the financial assets mature within 1 year. You can simply scale down proportionally (or using any other technique) the 1-year PDs of the counterparties to the term you need (if the outcome is material).
by DJP
03 Oct 2021, 01:11
Forum: IFRS-related topics
Topic: IFRS 16 purchase option
Replies: 15
Views: 465

Re: IFRS 16 purchase option

So how come you conclude that it's highly certain that the lesse will exercise the option?
by DJP
02 Oct 2021, 20:09
Forum: IFRS-related topics
Topic: IFRS 16 purchase option
Replies: 15
Views: 465

Re: IFRS 16 purchase option

But how can you, being the lessor, determine when the lessee will exercise their option if they can do so at anytime during the first 2 years?

(Again, I note that I am not an IFRS 16 expert)
by DJP
02 Oct 2021, 13:25
Forum: IFRS-related topics
Topic: IFRS 16 purchase option
Replies: 15
Views: 465

Re: IFRS 16 purchase option

I'd say 10 years in your case since that's the contractual term of the lease.
by DJP
01 Oct 2021, 18:10
Forum: IFRS-related topics
Topic: IFRS 16 purchase option
Replies: 15
Views: 465

Re: IFRS 16 purchase option

Not sure if you can account for this as an operating lease. It seems to me that you are transferring substantially the risks and rewards of the asset.
by DJP
01 Oct 2021, 15:49
Forum: IFRS-related topics
Topic: IFRS 16 purchase option
Replies: 15
Views: 465

Re: IFRS 16 purchase option

Hello,

This is not my area of expertise, but I am certain that you cannot apply the short-term lease exception. IFRS 16 is quite clear in that leases with purchase options are not eligible for the short-term lease exception.
by DJP
30 Sep 2021, 10:36
Forum: IFRS-related topics
Topic: Loan modification
Replies: 3
Views: 220

Re: Loan modification

Extending the maturity of the loan for 1 year is unlikely to fail the 10% derecognition test. This shall be treated as a modification. The new cash flows shall be discounted using the original effective interest rate and any difference shall be taken to P&L. (see IFRS 9 B5.4.6)
by DJP
29 Sep 2021, 11:44
Forum: IFRS-related topics
Topic: Borrowing costs per IAS 23
Replies: 6
Views: 260

Re: Borrowing costs per IAS 23

IAS 1 is rather silent regarding the income statement geography. It is not unusual for corporates to show all those items you mentioned under finance costs. It becomes a matter of internal policy.

IAS 23 and IFRS 9 is not the place to look for this.

Hope this helps!
by DJP
29 Sep 2021, 10:59
Forum: IFRS-related topics
Topic: Borrowing costs per IAS 23
Replies: 6
Views: 260

Re: Borrowing costs per IAS 23

Hello,

I am not sure if I fully understand your question. Are you trying to understand where to present borrowing costs and related costs in the income statement? If so, the relevant standard is IAS 1, not IAS 23.
by DJP
28 Sep 2021, 12:33
Forum: IFRS-related topics
Topic: when take a below-market loan partially, how the discount is calculated
Replies: 10
Views: 344

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

Your option 1 is not possible because you cannot recognise a discount for a financial asset you have not recognised yet. You will have to recognise the discount for each withdrawal. Why do you say it is impossible to define cash flows every time? You know how much it is being paid every quarter and ...
by DJP
28 Sep 2021, 11:38
Forum: IFRS-related topics
Topic: when take a below-market loan partially, how the discount is calculated
Replies: 10
Views: 344

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

What do you mean by "the repayment schedule is single for the whole contract"? Do you mean that the repayments of each individual withdrawal will be made at the same time?
by DJP
28 Sep 2021, 10:08
Forum: IFRS-related topics
Topic: when take a below-market loan partially, how the discount is calculated
Replies: 10
Views: 344

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

Then in my opinion you should determine what the market rate is at inception of the contract (signing date), and recognise a discount (assuming that the contract rate is below the market rate) every time you withdraw from the credit facility.
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: 10
Views: 344

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: 10
Views: 344

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: 123

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 ...
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: 359

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: 310

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: 310

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: 310

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: 359

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: 16781

Re: FX embedded derivatives in executory contracts

Ok, I think you have a point there. Thanks!