Financial guarantee
Financial guarantee
Hello there! I am having a case whereas my company got a bank loan with a personal guarantee by the shareholder. Once the funds were received fron the bank they were sent to the shareholder to secure the facility and guarantee. My question is whether this falls under financial guarantee IFRS9. Should my company recognise a financial guarantee receivable fromthe shareholder?
Re: Financial guarantee
Hi Descy,
That's an odd transaction... Why would the funds be transferred to the shareholder/guarantor? It seems that the shareholder got a loan via this entity instead. If that is the case, what you record in the entity is a loan to the shareholder and a borrowing from the bank. In case the entity paid a fee to the shareholder for the guarantee provided, you should capitalise it and include it in your effective interest calculations.
That's an odd transaction... Why would the funds be transferred to the shareholder/guarantor? It seems that the shareholder got a loan via this entity instead. If that is the case, what you record in the entity is a loan to the shareholder and a borrowing from the bank. In case the entity paid a fee to the shareholder for the guarantee provided, you should capitalise it and include it in your effective interest calculations.
Re: Financial guarantee
I also would recognise this as a loan receivable from the shareholder with any off-market terms recognised as described in https://ifrscommunity.com/knowledge-bas ... ate-loans/