Don't you mean "...still be considered as a financial liability"?
If the pref shares can be converted into a variable number of shares, it is a financial liability (IAS 32.11(b)(i))
Search found 345 matches
- 19 Dec 2023, 10:23
- Forum: IFRS-related topics
- Topic: Preference shares - PIK dividends
- Replies: 28
- Views: 2686
- 18 Dec 2023, 16:22
- Forum: IFRS-related topics
- Topic: IFRS 15 revenue recognition period with IAS 21
- Replies: 2
- Views: 654
Re: IFRS 15 revenue recognition period with IAS 21
What happens to the stations at the end of the contract? You should first check whether this contract is or contains a lease.
- 18 Dec 2023, 15:58
- Forum: IFRS-related topics
- Topic: IFRS 16 and IAS 21
- Replies: 2
- Views: 650
Re: IFRS 16 and IAS 21
Hello,
1. Interest payable on the lease liability is part of the lease liability's carrying amount. The lease liability is a monetary item and therefore needs to be FX revalued at each reporting date at the prevailing FX rate.
2. What is the context of this refundable deposit?
1. Interest payable on the lease liability is part of the lease liability's carrying amount. The lease liability is a monetary item and therefore needs to be FX revalued at each reporting date at the prevailing FX rate.
2. What is the context of this refundable deposit?
- 18 Dec 2023, 12:01
- Forum: IFRS-related topics
- Topic: Preference shares - PIK dividends
- Replies: 28
- Views: 2686
Re: Preference shares - PIK dividends
Hi Leo,
It is a financial asset because it is a non-derivative contract whereby the company will have to pay a variable number of pref shares depending on how SONIA evolves. See IAS 32 p11(d)(i)
It is a financial asset because it is a non-derivative contract whereby the company will have to pay a variable number of pref shares depending on how SONIA evolves. See IAS 32 p11(d)(i)
- 17 Dec 2023, 05:31
- Forum: IFRS-related topics
- Topic: Preference shares - PIK dividends
- Replies: 28
- Views: 2686
Re: Preference shares - PIK dividends
Hi Leo,
What makes you think that? A financial asset is a financial asset as defined in IAS 32.
What makes you think that? A financial asset is a financial asset as defined in IAS 32.
- 14 Dec 2023, 16:09
- Forum: IFRS-related topics
- Topic: SPPI on convertible note
- Replies: 4
- Views: 479
Re: SPPI on convertible note
Please note that that the instrument does not have to be a basic lending arrangement; it's the payments that must be the same as under a basic lending arrangement. So if the consideration you get upon conversion is exactly equal to the consideration you would get if you had a plain vanilla debt inst...
- 14 Dec 2023, 15:52
- Forum: IFRS-related topics
- Topic: Preference shares - contingent settlement
- Replies: 6
- Views: 741
Re: Preference shares - contingent settlement
Yes, I had read the draft. I did a bit of more research and I think you are right, a change of control clause, which normally requires a special meeting -- i.e. it is not a routine shareholder decision -- should be considered a shareholders decision rather than an entity decision. In any case, I fin...
- 14 Dec 2023, 09:48
- Forum: IFRS-related topics
- Topic: Preference shares - contingent settlement
- Replies: 6
- Views: 741
Re: Preference shares - contingent settlement
Hi hubertd, In my opinion, this is an equity instrument in the issuer's accounts. That is because the company can avoid paying cash by refusing a merger, acquisition, or sale of the company. These types of events always require approval from the shareholders and, therefore, they should be treated as...
- 13 Dec 2023, 11:52
- Forum: IFRS-related topics
- Topic: Preference shares - PIK dividends
- Replies: 28
- Views: 2686
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: 2686
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: 2686
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: 2686
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: 540
- 12 Dec 2023, 15:49
- Forum: IFRS-related topics
- Topic: Preference shares - PIK dividends
- Replies: 28
- Views: 2686
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: 1249
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: 1249
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: 1367
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: 1367
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: 299
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: 299
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: 529
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: 825
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: 825
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: 825
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: 3032
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: 623
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: 623
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: 286
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: 956
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: 385
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 ...