IFRScommunity.com

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...

Yes, you can present it separately on the face of the balance sheet. There is nothing in IFRS preventing you from doing so.

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...

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 ...

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...

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).

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...

The paragraph you are looking for is IFRS 9 B5.7.1

Cheers

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...

Hi Muzammil, the paragraphs I have I included above are the ones you should refer to

Have a look at IFSR 9 5.4.3 and BC4.252-3

Cheers

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...

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...

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 ...

Hello,

The entire fair value change must be recognised in P&L (including the effect of CVA/DVA).

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...

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 ...

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...

Hi,

The effect from changes in the EUR/USD rate for the revaluation of the EUR amounts stay in the consolidated P&L.

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 ...

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...

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...

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.

Welcome

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...

Hi christianm,

1) P&L

2) Cr financial asset (bond)

Loan commitments are derivatives in theory, but they are explicitely scoped out of IFRS 9 (see paragraph 2.1 (g)). There are only a few cases where you would account for them at FVTPL (see paragraph 2.3). As mentioned above, the issuer needs to record ECL impairment.

It is a benefit that the sub is getting for free. Most of the times companies recognise these intra-group freebies as capital contributions. But this is an accounting policy choice. You can well take it straight to P&L (which is easier to account for). Please also note that that once regonised, ...

Or as a capital contribution. There is an accounting policy choice here.

Not so sure about that last point. There may be no obligation to deliver cash, but there is an obligation to deliver another financial asset. In any case, I don't think this is relevant for the matter in question.