Home » IFRS

Interest income recognition usingeffective rate

28 August 2008 1,269 views No Comment
If an institution is recognizing income by using flat rate method, but IFRS requires to recognize by using effective rate method. My questions are:

a) policy remains but financial statements it should be based on effective rate. Is it?

b) How to convert portfolio by using effective rate.?

 

 

asim

I don’t think so, see this link

Hello:

 

Can anyone confirm if the PRC has officially transitioned to full IFRS GAAP reporting and if so, what was the effective date?  Are companies mandated to report in IFRS GAAP or can they still report in PRC GAAP up to a certain point?

 

Thanks for any clarification any of you can provide.

 

Also, if you have any resources you might refer me to, that would be great.

 

Debbie

 

 


 

 

 

The easy way would be that the outcome using a flat rate does not materially differ from using the (IFRS correct) effective rate. Otherwise the accounting needs to either

 

-          keep a separate ledger to account for income using an effective rate (for example a spreadsheet) and adjust it for financial statement purposes, or

-          calculate the difference between flat rate and an effective (average) rate for a period (month, quarter or year, the shorter the more real) and adjust the income amount.

 

Kind regards,

 

 

Henk


 

 

 

Hi,
 
Something you should also keep in mind is the impact of other items in the carrying amount and in the cash flows for the effective rate calculation. How is your income produced, from loans, leasings,etc? Do you charge fees? Do you pay commissions to third parties? All these items will have a direct impact on the calculations.
 
Regards,
Marc

Related Posts

  1. Loss on interest rate swap can be capitalized?
  2. Interest Rate Swap
  3. Interest Capitalization
  4. Loan Impairment
  5. Software revenue recognition under IFRSs & SOP 97-
  6. IAS 2 INVENTORIES – NET REALIZABLE VALUE AND WRITE-OFF
  7. Preparation of financial from IGAAP To IFRS
  8. Interest rate Swaps
  9. Loans interest
  10. Asset held for resale
1 Star2 Stars3 Stars4 Stars5 Stars (No Ratings Yet)
Loading ... Loading ...

Leave your response!

You must be logged in to post a comment.