Search found 345 matches

by DJP
19 Dec 2023, 10:23
Forum: IFRS-related topics
Topic: Preference shares - PIK dividends
Replies: 28
Views: 2684

Re: Preference shares - PIK dividends

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))
by DJP
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.
by DJP
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?
by DJP
18 Dec 2023, 12:01
Forum: IFRS-related topics
Topic: Preference shares - PIK dividends
Replies: 28
Views: 2684

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)
by DJP
17 Dec 2023, 05:31
Forum: IFRS-related topics
Topic: Preference shares - PIK dividends
Replies: 28
Views: 2684

Re: Preference shares - PIK dividends

Hi Leo,

What makes you think that? A financial asset is a financial asset as defined in IAS 32.
by DJP
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...
by DJP
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...
by DJP
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...
by DJP
13 Dec 2023, 11:52
Forum: IFRS-related topics
Topic: Preference shares - PIK dividends
Replies: 28
Views: 2684

Re: Preference shares - PIK dividends

You're welcome. I don't think you can use the FVOCI option for compound instruments.
by DJP
13 Dec 2023, 11:00
Forum: IFRS-related topics
Topic: Preference shares - PIK dividends
Replies: 28
Views: 2684

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 ...
by DJP
13 Dec 2023, 08:39
Forum: IFRS-related topics
Topic: Preference shares - PIK dividends
Replies: 28
Views: 2684

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?
by DJP
12 Dec 2023, 19:25
Forum: IFRS-related topics
Topic: Preference shares - PIK dividends
Replies: 28
Views: 2684

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...
by DJP
12 Dec 2023, 15:49
Forum: IFRS-related topics
Topic: Preference shares - PIK dividends
Replies: 28
Views: 2684

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...
by DJP
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.
by DJP
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...
by DJP
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 ...
by DJP
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...
by DJP
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).
by DJP
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...
by DJP
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
by DJP
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...
by DJP
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
by DJP
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
by DJP
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...
by DJP
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...
by DJP
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 ...
by DJP
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).
by DJP
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...
by DJP
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 ...