A Parent has made an interest free loan to its Subsidiary. The loan will be repaid fully in 10 years (in only one installment).
The principal activity of the Parent is Investing Holding and to manage the activity of its Subsidiary. The Subsidiary is involved in trading activities.
Should the loan be measured at amortised cost or FVTPL?
Interest Free Loan
Re: Interest Free Loan
Amortised cost, but note the initial recognition:
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Re: Interest Free Loan
Yes very common.
And in the other direction potentially a distribution.
Classic trick is to set terms as flexible so can be presented as current and therefore no discounting.
And in the other direction potentially a distribution.
Classic trick is to set terms as flexible so can be presented as current and therefore no discounting.
Re: Interest Free Loan
That's a clever trick!