Search found 114 matches

by DJP
25 Mar 2021, 10:57
Forum: IFRS-related topics
Topic: POST DATED CHEQUE UNDER IAS 37 QUESTION
Replies: 8
Views: 1510

Re: POST DATED CHEQUE UNDER IAS 37 QUESTION

mmm....not sure about that. Bills receivable are usually reported under trade and bills receivable. A cash equivalent is defined as an "investment" blablabla, but in this case you are not "investing" in the bills receivable. You are receiving this financial asset in return for th...
by DJP
24 Mar 2021, 15:38
Forum: IFRS-related topics
Topic: POST DATED CHEQUE UNDER IAS 37 QUESTION
Replies: 8
Views: 1510

Re: POST DATED CHEQUE UNDER IAS 37 QUESTION

I would show this as a bill receivable. 3 months seems too long to be a simple reconciling item on the bank.
by DJP
04 Mar 2021, 10:43
Forum: IFRS-related topics
Topic: IAS 32 Compound Instrument - Debit balance in equity
Replies: 10
Views: 1392

Re: IAS 32 Compound Instrument - Debit balance in equity

Correct. The market rate should be adjusted for the issuer's credit risk. For this transaction to make sense, that credit risk must be quite high.
by DJP
03 Mar 2021, 09:38
Forum: IFRS-related topics
Topic: Interest rate swap on debt
Replies: 24
Views: 5637

Re: Interest rate swap on debt

Hi Leo, The objective of a fair value hedge is that the fair value changes on your hedged item (the fixed-rate borrowing) are compensated by the fair value changes on your hedging instruments (the IRS). You are right when you say that what you are trying to achieve is a zero change in fair value, bu...
by DJP
24 Feb 2021, 08:44
Forum: IFRS-related topics
Topic: Contingent redemption option in share investments
Replies: 12
Views: 1172

Re: Contingent redemption option in share investments

Yes, I think so too. Another question is how to value such options... But that's not an accounting question :)
by DJP
23 Feb 2021, 18:11
Forum: IFRS-related topics
Topic: Contingent redemption option in share investments
Replies: 12
Views: 1172

Re: Contingent redemption option in share investments

Yup, same amount invested plus a fixed interest rate
by DJP
23 Feb 2021, 16:46
Forum: IFRS-related topics
Topic: Contingent redemption option in share investments
Replies: 12
Views: 1172

Re: Contingent redemption option in share investments

in case of a certain event (which is outside the control of the issuer), the investor can demand its money back. Basically the investor can sell the shares back to the investor if that event occurs. This event can be something like an unsuccessful IPO, the exit of a key employee, etc... (i.e. non-fi...
by DJP
23 Feb 2021, 15:52
Forum: IFRS-related topics
Topic: Contingent redemption option in share investments
Replies: 12
Views: 1172

Re: Contingent redemption option in share investments

The question is about the accounting from an investor's point of view. Even if the instrument is classified as a liability on the issuer's side, the arrangement gives the investor significant influence over the entity with rights over its variable returns. We are then in the scope of IAS 28 and equi...
by DJP
23 Feb 2021, 12:23
Forum: IFRS-related topics
Topic: Contingent redemption option in share investments
Replies: 12
Views: 1172

Contingent redemption option in share investments

Hello everyone, Has anyone come across a share investment where the share gives the investor similar rights to ordinary shareholders in terms of access to variable returns and voting rights (providing the investor with significant influence ), but the investor has the option to sell the shares back ...
by DJP
15 Feb 2021, 12:05
Forum: IFRS-related topics
Topic: IFRS 9/IFRS 16 - Security Deposit on Rental Agreement
Replies: 5
Views: 1698

Re: IFRS 9/IFRS 16 - Security Deposit on Rental Agreement

It should be accounted for at amortised cost, but just to be clear, this does not mean that the asset is amortised. Since the deposit does not pay any interest, in theory you should discount the future cash flow using a relevant market interest rate, and then unwind (amortise) the discount (differen...
by DJP
15 Feb 2021, 10:28
Forum: IFRS-related topics
Topic: IFRS 9/IFRS 16 - Security Deposit on Rental Agreement
Replies: 5
Views: 1698

Re: IFRS 9/IFRS 16 - Security Deposit on Rental Agreement

Is this a deposit or an upfront payment? If it is a deposit, presumably you will get it at the end of the lease term. If so, there is nothing to amortise and the deposit should be accounted for as Other financial asset at amortised cost.
by DJP
25 Jan 2021, 15:50
Forum: IFRS-related topics
Topic: EIR calculation based on success rate
Replies: 11
Views: 1140

Re: EIR calculation based on success rate

I agree with Marek's analysis.
by DJP
06 Jan 2021, 09:39
Forum: IFRS-related topics
Topic: EAD for debt securities
Replies: 1
Views: 266

Re: EAD for debt securities

Accrued interest should also be considered
by DJP
16 Dec 2020, 11:20
Forum: IFRS-related topics
Topic: Current or non-current loan
Replies: 54
Views: 16761

Re: Current or non-current loan

In my opinion, it would be misleading to show the liability as non-current and thus imply that the entity does not have to repay it within 12 months when, all else equal, in 6 months' time the liability becomes payable on demand. Not to mention the difficulty (and risk) for the auditors to provide a...
by DJP
15 Dec 2020, 18:14
Forum: IFRS-related topics
Topic: Current or non-current loan
Replies: 54
Views: 16761

Re: Current or non-current loan

I do agree with the conclusion. The financial reporting is supposed to give a true and fair view of an entity's financial position as at the reporting date, based on historical records; not based on future events. Few exceptions to this principle have been created, notably credit impairments, where ...
by DJP
04 Dec 2020, 08:49
Forum: IFRS-related topics
Topic: Loan Vs Receivables
Replies: 8
Views: 868

Re: Loan Vs Receivables

It is likely neither. If there is no contractual obligation for company B to pay company X, this is not a financial liability in the books of company B. The way you describe the scenario feels like this was a capital contribution of company X into company B when they were part of the same group. Thi...
by DJP
04 Dec 2020, 08:39
Forum: IFRS-related topics
Topic: Market cap of an entity as impairment indication
Replies: 5
Views: 524

Re: Market cap of an entity as impairment indication

Ok so I changed my mind and it makes sense after all :D This kind of implies that investors are willing to pay at least $120m for these assets, i.e. above their carrying amount :) Well.... it does imply that, but it doesn't necessarily mean that. There are so many investors out there these days mov...
by DJP
03 Dec 2020, 13:16
Forum: General accounting and financial reporting discussion
Topic: Accrual for audit fees
Replies: 24
Views: 6664

Re: Accrual for audit fees

don't you love all the twists and turns a topic can take? :) I would say that most audit assignments satisfy the third condition, i.e. no alternative use and enforceable right to payment for performance completed to date do you happen to know how audit firms actually recognise their revenue under I...
by DJP
30 Nov 2020, 16:58
Forum: IFRS-related topics
Topic: Financial Instruments with Characteristics of Equity
Replies: 57
Views: 6764

Re: Financial Instruments with Characteristics of Equity

Hello everyone, If I understand this case correctly, the issuer can avoid settlement of the amount invested and dividends (even if they accumulate). If so, this meets the definition of equity as per IAS 32 para 16. At liquidation the whole arrangement may be seen as a liability and take precedence o...
by DJP
28 Nov 2020, 13:40
Forum: IFRS-related topics
Topic: Current or non-current loan
Replies: 54
Views: 16761

Re: Current or non-current loan

Correct, but that's assuming that the covenant will not change in the coming 12 months. In the case in analysis, as at 31 December the actual situation is not compliant with a covenant that needs to be verified in 6 month's time. Therefore, the entity cannot state at 31 December that it can defer se...
by DJP
27 Nov 2020, 18:44
Forum: IFRS-related topics
Topic: Current or non-current loan
Replies: 54
Views: 16761

Re: Current or non-current loan

I may have changed my opinion due to that last sentence in paragraph 72A... I guess if indeed as per 30 June X2 the covenant changes, then the liability may have to be classified as current on 31 December X1 because at that date the entity does not comply with the conditions to avoid settlement of t...
by DJP
27 Nov 2020, 14:44
Forum: IFRS-related topics
Topic: Current or non-current loan
Replies: 54
Views: 16761

Re: Current or non-current loan

Which makes sense. The IASB has made it clear that it is the conditions observable at the reporting date that matter. For the same reason that expected covenants-breach remedies cannot be considered (Jonny's example), the expectation of a future breach should not be considered as well.
by DJP
27 Nov 2020, 14:00
Forum: IFRS-related topics
Topic: Current or non-current loan
Replies: 54
Views: 16761

Re: Current or non-current loan

Hello everyone,

The covenants seem to have not been breached at the reporting date. The loan should therefore classify as non-current as there is no obligation to repay the loan within 12 months from the reporting date.
by DJP
25 Nov 2020, 13:08
Forum: IFRS-related topics
Topic: Novation derivate swap
Replies: 7
Views: 754

Re: Novation derivate swap

I agree with pub_acco analysis, but it really depends on how the hedge accounting documentation is written. If the documentation mentions that hedging was done at the consolidated level as well, then you may have an argument to continue hedge accounting at the consolidated level. However, at the ent...
by DJP
19 Nov 2020, 10:16
Forum: IFRS-related topics
Topic: Hedging with options
Replies: 5
Views: 787

Re: Hedging with options

Hi hubertd,

Why do you say this is impractical under IAS 39 ? You can designate only the intrinsic value of the option if you like, which will make things easier from an effectiveness point of view.

Rgds
by DJP
12 Nov 2020, 18:34
Forum: IFRS-related topics
Topic: IFRS 9 Incremental costs of obtaining a derivate
Replies: 23
Views: 1159

Re: IFRS 9 Incremental costs of obtaining a derivate

This agency fee seems to relate exclusively to the PPA contract. Therefore, in my opinion, it cannot classify as a transaction cost of the loan.
by DJP
12 Nov 2020, 15:12
Forum: IFRS-related topics
Topic: IFRS 9 Incremental costs of obtaining a derivate
Replies: 23
Views: 1159

Re: IFRS 9 Incremental costs of obtaining a derivate

In any case, I don't think you can consider either as a transaction cost of the loan. Entering into that contract may create the conditions for your obtaining the loan, but it is not a cost that you specifically incur to obtain the loan. Plus, according to you the contract seems to be a derivative.
by DJP
12 Nov 2020, 15:03
Forum: IFRS-related topics
Topic: IFRS 9 Incremental costs of obtaining a derivate
Replies: 23
Views: 1159

Re: IFRS 9 Incremental costs of obtaining a derivate

yes to the agency fees or to the contract?
by DJP
12 Nov 2020, 14:29
Forum: IFRS-related topics
Topic: IFRS 9 Incremental costs of obtaining a derivate
Replies: 23
Views: 1159

Re: IFRS 9 Incremental costs of obtaining a derivate

Do you mean the agency fees or the (derivative) PPA contract?
by DJP
04 Nov 2020, 14:35
Forum: IFRS-related topics
Topic: IFRS 9 Incremental costs of obtaining a derivate
Replies: 23
Views: 1159

Re: IFRS 9 Incremental costs of obtaining a derivate

Just to make it clear, I would not take the agency fee to the Revenue line. I would take it to Other operating expenses or some other similar line item.