FV of loan for disclosure

All topics related to IFRS Standards.
Post Reply
Leo
Posts: 909
Joined: 05 Apr 2020, 22:31

FV of loan for disclosure

Post by Leo »

Hi guys,

Just one small question.

Do you have to disclose the FV of the loans (liabilities) in the annual report, is that mandatory?

I mean, we calculate our loan at amortized costs but this isn't the fair value.

Thank you!
User avatar
Marek Muc
Site Admin
Posts: 3229
Joined: 15 Oct 2018, 17:21
Contact:

Re: FV of loan for disclosure

Post by Marek Muc »

yes, see paragraphs IFRS 7.25-29; B1-B3 IG14
Leo
Posts: 909
Joined: 05 Apr 2020, 22:31

Re: FV of loan for disclosure

Post by Leo »

I've looked into few financial report from listed companies, I rarely see company does that in their financial report.
User avatar
Marek Muc
Site Admin
Posts: 3229
Joined: 15 Oct 2018, 17:21
Contact:

Re: FV of loan for disclosure

Post by Marek Muc »

I guess you can say that for many loans the difference between FV and amortised cost won't be material and get away without disclosing actual difference
Leo
Posts: 909
Joined: 05 Apr 2020, 22:31

Re: FV of loan for disclosure

Post by Leo »

Thank you !!!
JRSB
Trusted Expert
Posts: 1309
Joined: 01 Mar 2020, 01:10
Location: UK

Re: FV of loan for disclosure

Post by JRSB »

What in your case Leo is the indication that FV is different?
Leo
Posts: 909
Joined: 05 Apr 2020, 22:31

Re: FV of loan for disclosure

Post by Leo »

Hi,

yes. For example, we have a term loan with upfront fees that we book at amortized cost. And the term loan is listed. So I suppose that the IFRS book value might be different that its market value?

If I follow the guidance IFRS, I have to disclose both value, at amortised costs and the FV as well, knowing that it's the one by using amortized cost that I have in my books.

Thank you.

BR
JRSB
Trusted Expert
Posts: 1309
Joined: 01 Mar 2020, 01:10
Location: UK

Re: FV of loan for disclosure

Post by JRSB »

Thanks very much

I guess the traded price is an approximation of the future cash flows, discounted at a different market risk rate, plus or minus 'market noise'.
Leo
Posts: 909
Joined: 05 Apr 2020, 22:31

Re: FV of loan for disclosure

Post by Leo »

Exactly !!!

And what we have actually in our books is discount of the future cash flow with effective interest rates.

So the only difference, its between the EIR and the market rate.

I realize more and more that IFRS it's so Ayatollah.
Last edited by Leo on 07 Jan 2021, 11:08, edited 1 time in total.
User avatar
Marek Muc
Site Admin
Posts: 3229
Joined: 15 Oct 2018, 17:21
Contact:

Re: FV of loan for disclosure

Post by Marek Muc »

oh, so your debt is listed? interesting

is it floating rate?

The FV can get different if you're in the industry hit by the pandemic, as changes in credit risk impact FV, but do not impact amortised cost of a liability in issuer's books
Leo
Posts: 909
Joined: 05 Apr 2020, 22:31

Re: FV of loan for disclosure

Post by Leo »

Exactly !!!

thank you !!!

No fixe rate.
User avatar
Marek Muc
Site Admin
Posts: 3229
Joined: 15 Oct 2018, 17:21
Contact:

Re: FV of loan for disclosure

Post by Marek Muc »

so if it's fixed rate, then this is obviously another factor than can drive FV away from amortised cost
Leo
Posts: 909
Joined: 05 Apr 2020, 22:31

Re: FV of loan for disclosure

Post by Leo »

That's right.
Post Reply