Prepayments
Posted: 22 Sep 2021, 10:34
Hello Marek,
The Company paid prepayments for the delivery of goods in 2018 to a related party. Prepayments were reclassified from short-term prepayments to long-term aprepayments. The settlement of "prepayments" is likely to take place in the coming years through the delivery of goods. The Company cannot reclassify prepayments into loans due to bond covenants. Due to the fact that there will be a very long period from the payment of the prepayments to the date of receipt of the goods, should the Company separate the financing element? If so, should I use IFRS 15 to extract this element? Should I recognize the cost of purchasing goods at the cash price and charge interest income as the difference between the cash price and the lower price paid for the goods that results from the prepayment?
Best regards,
Aga
The Company paid prepayments for the delivery of goods in 2018 to a related party. Prepayments were reclassified from short-term prepayments to long-term aprepayments. The settlement of "prepayments" is likely to take place in the coming years through the delivery of goods. The Company cannot reclassify prepayments into loans due to bond covenants. Due to the fact that there will be a very long period from the payment of the prepayments to the date of receipt of the goods, should the Company separate the financing element? If so, should I use IFRS 15 to extract this element? Should I recognize the cost of purchasing goods at the cash price and charge interest income as the difference between the cash price and the lower price paid for the goods that results from the prepayment?
Best regards,
Aga