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IFRS 9 Payables and Receivables

Posted: 16 Oct 2023, 16:39
by IFRS2020
An entity is due to make a payment, so recognise a payable which gets cleared when the cash payment is subsequently made. The debit side should be an asset, as once the payment has been made, the entity has a right to recover its amount from a counterparty. My question is where would the debit entry be posted while the payable is recognised (Dr=?, Cr=payables)? The receivable should only be recognised once the cash leaves through the door as at this point the contractual right to recover the money becomes effective. The entry at this point would look like Cr = Bank and Dr = Asset. I would welcome thoughts/views on this. Thanks

Re: IFRS 9 Payables and Receivables

Posted: 16 Oct 2023, 19:41
by Ketan Marwah
Hi,

Don't think this specifically is a IFRS question even though we are referring to FA's & FL's (when raising an accounting question we are bound to explore the IFRS world) but anyhow, on what basis did you assume a liability to pay? The answer to this would be the debit in your journal entry. I would suggest you untangle the the specific arrangement and decide on the debit and credits. Timing of your claim could vary like you mentioned that you would only be able to ask for payment upon actual remittance but a claim to payment might have risen earlier simultaneous to you paying someone. I have given a very broad response hence as mentioned earlier please look at the contractual arrangement closely to form your debits/credits.

Re: IFRS 9 Payables and Receivables

Posted: 16 Oct 2023, 20:19
by exIFRS
I agree with Ketan, there isn't enough information here to understand the economic substance, and therefore it is not possible to untangle the arrangement.

Re: IFRS 9 Payables and Receivables

Posted: 16 Oct 2023, 20:55
by IFRS2020
Thanks all, I will check the contractual arrangement in detail.