Search found 367 matches
- 13 Dec 2023, 11:52
- Forum: IFRS-related topics
- Topic: Preference shares - PIK dividends
- Replies: 28
- Views: 3148
Re: Preference shares - PIK dividends
You're welcome. I don't think you can use the FVOCI option for compound instruments.
- 13 Dec 2023, 11:00
- Forum: IFRS-related topics
- Topic: Preference shares - PIK dividends
- Replies: 28
- Views: 3148
Re: Preference shares - PIK dividends
The PIK dividends seem to be a financial liability because the issuer has a contractual obligation to deliver another financial asset (more pref shares). The initial investment in pref shares seems to be equity because the issuer does not have a contractual obligation to pay cash or deliver another ...
- 13 Dec 2023, 08:39
- Forum: IFRS-related topics
- Topic: Preference shares - PIK dividends
- Replies: 28
- Views: 3148
Re: Preference shares - PIK dividends
If the "successful commissioning of the project" is under the control of the issuer, they could prevent payment of the pref shares and of any subsequent PIK dividends, could they not?
- 12 Dec 2023, 19:25
- Forum: IFRS-related topics
- Topic: Preference shares - PIK dividends
- Replies: 28
- Views: 3148
Re: Preference shares - PIK dividends
Yes, you are right in case you want to make the FVOCI election, but I just assumed you didn't want to given the only two options you suggested. Going back to your question, this seems to be a contingent settlement. If the issuer does not have the ability to avoid delivering cash or another financial...
- 12 Dec 2023, 17:28
- Forum: IFRS-related topics
- Topic: Below market fixed rate loan - discounted using LIBOR at initial recognition as the market interest rate
- Replies: 5
- Views: 625
- 12 Dec 2023, 15:49
- Forum: IFRS-related topics
- Topic: Preference shares - PIK dividends
- Replies: 28
- Views: 3148
Re: Preference shares - PIK dividends
I believe hubertd's question is regarding the treatment from the investor's perspective (i.e. asset side). It doesn't make any difference whether the instrument is classified as equity or a financial liability on the issuer's side. The payments under this asset fail the SPPI test and the financial a...
- 12 Dec 2023, 13:31
- Forum: IFRS-related topics
- Topic: Digital assets treatment
- Replies: 8
- Views: 1360
Re: Digital assets treatment
Yes, you can present it separately on the face of the balance sheet. There is nothing in IFRS preventing you from doing so.
- 12 Dec 2023, 13:11
- Forum: IFRS-related topics
- Topic: Digital assets treatment
- Replies: 8
- Views: 1360
Re: Digital assets treatment
This scenario is a bit confusing, but I think I understand it. Please confirm if my understanding is correct: - The company is issuing digital assets (i.e. cryptocurrency) to finance the development of a specific product - One of the investors in those digital tokens is also the buyer of the specifi...
- 12 Dec 2023, 11:01
- Forum: IFRS-related topics
- Topic: Interest earned where there is no asset
- Replies: 9
- Views: 1485
Re: Interest earned where there is no asset
Ok, in that case, the interest received on those accounts belongs in full to your clients. If you agree to charge them part of the interest earned on those accounts, that will either be recognised as your revenue, or other income (not interest income). The way you operationalise this is a different ...
- 12 Dec 2023, 09:56
- Forum: IFRS-related topics
- Topic: Interest earned where there is no asset
- Replies: 9
- Views: 1485
Re: Interest earned where there is no asset
Hello, If your clients' money is comingled in the same account, then the account is your asset (you control the account and have economic benefits). You will have at the same time a liability towards your clients. The only way for you not to recognise clients' money as your asset is if you have dedi...
- 08 Dec 2023, 18:14
- Forum: IFRS-related topics
- Topic: Qualifying asset financed through below market interest rate loan
- Replies: 3
- Views: 366
Re: Qualifying asset financed through below market interest rate loan
Something doesn't seem right. If you are amortising the grant to P&L that means that the qualifying asset is already in use (IAS 20 p12). If that is the case, you should have already ceased capitalising borrowing costs (IAS 23 p22).
- 08 Dec 2023, 13:35
- Forum: IFRS-related topics
- Topic: Qualifying asset financed through below market interest rate loan
- Replies: 3
- Views: 366
Re: Qualifying asset financed through below market interest rate loan
You can account for the grant either by deducting the grant from the carrying amount of the qualifying asset or by recognising deferred revenue and take it to P&L at the same time as you amortise the qualifying asset. The idea is that the grant hits P&L at the same time as the qualifying ass...
- 08 Dec 2023, 09:31
- Forum: IFRS-related topics
- Topic: IFRS-9 derecognition of equity instrument at FVTOCI
- Replies: 5
- Views: 613
Re: IFRS-9 derecognition of equity instrument at FVTOCI
The paragraph you are looking for is IFRS 9 B5.7.1
Cheers
Cheers
- 07 Dec 2023, 12:08
- Forum: IFRS-related topics
- Topic: IFRS-9: Modification/Derecognition of Financial Liabilities
- Replies: 7
- Views: 927
Re: IFRS-9: Modification/Derecognition of Financial Liabilities
Have a look at IFSR 9 5.4.3 and BC4.252-3 Cheers Sir, I think IFRS 9 paragraph 5.4.3 relates to the Financial assets, not financial liabilities. Please correct me if I am wrong You are right, but that's why you need to look at paragraphs BC4.252 and 253. The same logic applies to financial liabilit...
- 07 Dec 2023, 10:58
- Forum: IFRS-related topics
- Topic: IFRS-9: Modification/Derecognition of Financial Liabilities
- Replies: 7
- Views: 927
Re: IFRS-9: Modification/Derecognition of Financial Liabilities
Hi Muzammil, the paragraphs I have I included above are the ones you should refer to
- 07 Dec 2023, 10:08
- Forum: IFRS-related topics
- Topic: IFRS-9: Modification/Derecognition of Financial Liabilities
- Replies: 7
- Views: 927
Re: IFRS-9: Modification/Derecognition of Financial Liabilities
Have a look at IFSR 9 5.4.3 and BC4.252-3
Cheers
Cheers
- 06 Dec 2023, 11:09
- Forum: IFRS-related topics
- Topic: Fair value of a loan commitment with below market interest rate
- Replies: 29
- Views: 3317
Re: Loan commitments below market interest rates
How to fair value a loan commitment is not an accounting/IFRS question. But in any case, Marek's point makes sense. If you can fair value a loan commitment at inception, you should be able to fair value the loan commitment at any point in time. Basically, at the reporting date, you will have to dete...
- 29 Nov 2023, 17:55
- Forum: IFRS-related topics
- Topic: Financial Guarantee Contract - discounting
- Replies: 8
- Views: 730
Re: Financial Guarantee Contract - discounting
It is obvious that the borrower's borrowing rate must reflect the borrower's credit risk. How to go about this, that's a different question. And yes, you will have to adjust a risk-free rate with the borrower's credit risk. Your Transfer Pricing or Treasury team should be able to assist you (in case...
- 29 Nov 2023, 15:57
- Forum: IFRS-related topics
- Topic: Financial Guarantee Contract - discounting
- Replies: 8
- Views: 730
Re: Financial Guarantee Contract - discounting
I also agree. It makes sense to use the borrower's normal borrowing rate (without considering the guarantee). If the borrowers defaults, the guarantor will reimburse the lender and then will claim the money from the borrower. Therefore, the premium should reflect the borrower's risk, because that's ...
- 27 Nov 2023, 09:43
- Forum: IFRS-related topics
- Topic: Accounting for CVA / DVA
- Replies: 2
- Views: 345
Re: Accounting for CVA / DVA
Hello,
The entire fair value change must be recognised in P&L (including the effect of CVA/DVA).
The entire fair value change must be recognised in P&L (including the effect of CVA/DVA).
- 22 Nov 2023, 11:07
- Forum: IFRS-related topics
- Topic: Transaction price vs fair value
- Replies: 9
- Views: 1088
Re: Transaction price vs fair value
Hi IFRS2020, Yes, for loan commitments it is most likely the case that the rate at the time of recognition (drawdown date) will be different from the rate agreed (rate will have changed in the meantime). Loan commitments meet the definition of derivatives, but the IASB excluded them from the scope o...
- 21 Nov 2023, 10:17
- Forum: IFRS-related topics
- Topic: Accounting for investment in Mutual funds
- Replies: 2
- Views: 446
Re: Accounting for investment in Mutual funds
Hello Option A is the correct answer in my opinion. I don't think you will find any guidance in this respect in IFRS, but given that changes in the fair value of the instrument are also due to changes in FX rates, you need to follow IFRS 9 and book the full fair value changes in P&L (definitely ...
- 20 Nov 2023, 09:55
- Forum: IFRS-related topics
- Topic: Transaction price vs fair value
- Replies: 9
- Views: 1088
Re: Transaction price vs fair value
Isn't this just a loan commitment? Loan commitments are embedded derivatives, but they are specifically excluded from the scope of IFRS 9 (to avoid this kind of accounting complexities). If the rate was the market rate at the time it was agreed, you just use that rate for the amortised cost measurem...
- 16 Nov 2023, 09:47
- Forum: IFRS-related topics
- Topic: Translation issue - presentation currency vs functional currency
- Replies: 8
- Views: 552
Re: Translation issue - presentation currency vs functional currency
Hi,
The effect from changes in the EUR/USD rate for the revaluation of the EUR amounts stay in the consolidated P&L.
The effect from changes in the EUR/USD rate for the revaluation of the EUR amounts stay in the consolidated P&L.
- 14 Nov 2023, 10:31
- Forum: IFRS-related topics
- Topic: Offsetting a non-financial asset and a financial liability
- Replies: 7
- Views: 978
Re: Offsetting a non-financial asset and a financial liability
This scenario is indeed not clear at all. Please confirm if the scenario is as follows: A grower cannot obtain a loan from a bank on its own, so the mill provides a guarantee to the bank. The loan proceeds will go directly to the grower, but the mill will repay the loan to the bank on behalf of the ...
- 01 Nov 2023, 09:45
- Forum: IFRS-related topics
- Topic: Related Party transactions
- Replies: 2
- Views: 544
Re: Related Party transactions
Hi stella, Business Combinations Under Common Control are not addressed by any IFRS at the moment. The IASB is currently looking into this. Companies need to develop an internal accounting policy. You probably have seen this policy in one of the Big 4 publications. Search for accounting for business...
- 31 Oct 2023, 14:38
- Forum: IFRS-related topics
- Topic: Bonds accounting treatment
- Replies: 14
- Views: 1661
Re: Bonds accounting treatment
Hi Jakob, From the investor's point of view, a transaction cost is a cost directly attributable to the acquisition or disposal of the financial asset. A consent fee is a cost that you normally incur sometime during the life of the financial asset (for example to agree to the dilution of the bondhold...
- 31 Oct 2023, 10:07
- Forum: IFRS-related topics
- Topic: Bonds accounting treatment
- Replies: 14
- Views: 1661
Re: Bonds accounting treatment
Yes, you revise the EIR for floating rate instruments, but only due to changes in interest rates and not because you incur extra costs/fees that have nothing to do with the issuance or acquisition of the instrument.
- 30 Oct 2023, 12:26
- Forum: IFRS-related topics
- Topic: Bonds accounting treatment
- Replies: 14
- Views: 1661
Re: Bonds accounting treatment
Welcome
- 30 Oct 2023, 09:23
- Forum: IFRS-related topics
- Topic: Bonds accounting treatment
- Replies: 14
- Views: 1661
Re: Bonds accounting treatment
Good morning. Allow me to disagree with a point made by JakobLavrod. A consent fee is not a transaction cost and should not be included in the EIR calculation. Also, the EIR should never be changed, except in a few scenarios involving hedge accounting. If the bonds are recognised at FVTPL then EIR d...