can you answer my following question in details.
1. we take a loan and pay processing fee for taking loan.
for eg. if we take a loan of rs 10 lacs , we generally pay processing fee of rs.50000. if you see the net amount in hand is rs 9.5 lacs
As per Indian Generally Accepted Accouting Prolices(IGAAP), we recognise the loan at rs. 10 lacs and rs 50000 is expensed off in the year in which loan is taken.
But in IFRS treatment for this is different. can you favour me to understand that.
thanks in advance and regards
I suggest that you read ICAI’s AS 30 on Financial Instrument Recognition and Measurement which is a direct copy of IAS 39 save for the fact that certain paras contained in Basis for Conclusion or Application guidance in IAS 39 have been added to the direct text and a few clarifications have been given.
Once this standard is enforced from next year there will be no difference per se unless further amendments are made to IAS 39 which will need to be incorporated in AS 30.
Specific to your query is Application Guidance in Appendix A of AS 30 para A25 and in Section E 1.1 of the Guidance on Implementing AS 30 which is in the same format as the old IAS 39 before these texts were brought forward.
Trust that helps. The guidance also has worked examples in many places.