Hi all, I am writing regarding specifically about IFRS 9 3.3.4. Link follows below:
https://www.ifrs.org/issued-standards/l ... /#standard
I have tried to find an example of an application of the principle to a cash debt tender offer, but couldn't find one anywhere. I am confused by what is meant by relative fair value (trading bond price at repurchase date?), how exactly is the carrying amount allocated into a derecognized part and a continuing part? As well as how do bond fees and bond discount / (premium) amortization change?
If someone could post a simple example it would be of immense help!
Thanks a lot.
IFRS 9 - Partial Derecognition of Debt
Re: IFRS 9 - Partial Derecognition of Debt
I don't recall coming across a numerical example illustrating this paragraph, but maybe some else does.
Re. allocation - for example a debt with carrying amount of 100 has a fair value of 80. You repurchase half of it for 40. It means that you need to derecognise it based on relative fair values i.e. half calculated as 40/80, and not 40% as would be calculated based on carrying amount (40/100).
Bond discount/premiums are subsumed into amortised cost so you derecognise them applying the same basic principle. I suggest you play with the excel files available on this page and see how it goes:
https://ifrscommunity.com/knowledge-bas ... rest-rate/
DIY is the best way to learn
BTW - will you publish your writing somewhere?
Re. allocation - for example a debt with carrying amount of 100 has a fair value of 80. You repurchase half of it for 40. It means that you need to derecognise it based on relative fair values i.e. half calculated as 40/80, and not 40% as would be calculated based on carrying amount (40/100).
Bond discount/premiums are subsumed into amortised cost so you derecognise them applying the same basic principle. I suggest you play with the excel files available on this page and see how it goes:
https://ifrscommunity.com/knowledge-bas ... rest-rate/
DIY is the best way to learn
BTW - will you publish your writing somewhere?
Re: IFRS 9 - Partial Derecognition of Debt
Thanks a lot Marek!
I will play around with the file to see how it goes, if I have any questions i will post it in this topic again. And no, won't be publishing my writing anywhere
I will play around with the file to see how it goes, if I have any questions i will post it in this topic again. And no, won't be publishing my writing anywhere