i am working in a home finance company which is subsidary of german company, due to which we are require to prepare the financial from IGAAP to IFRS.
1.we take a loan and in taking loan that we usually pay a processing fee.
2. we pay security deposit for taking Building on rent.
3. we pay Fringe benefit tax on varoius items
i want to know,how the above mentioned items will be Accounted in Books in IFRS.
thanks in advance
Hi , I had read IAS 32-39 and if you like read ias 39, over there are the answer to your question. Good look.
- You should apply IAS39 because loan and borrowing should be calculated on effective interest basis and processing fee should be considered in to the account,
- It depended on the financial instruments you place as security deposit. If you pay money, you have very simple entry by debit Deposit(asset) and credit Bank. If you use other financial instrument, you should observe the accounting rule in IAS39 about Recognition and Decognition because it depended on the economic substance of transaction. I can’t answer it exactly.
Please read IAS 39 carefully and base your treatment for the loan according to classification of the liability. There have been amendments following the improvements project of 2007 and hence please look at that as well as treatment may have changed.
Security deposit treatment will depend upon the nature of the deposit and whether the primary lease has expired.
As for FBT, this does not fall under IAS 12 and would need to be allocated to the expense head that it pertains to.
I am highly appreciated if could answer following:
ABC is a company that offering loan on flat rate basis. Say 20%
Q 1 Can we say that effective rate as per IFRS is the rate equivalent to declining method?
Q2 AS IFRS, we need to recognise interest income on effective rate method…it means that we have to calculate the portfolio as per effective rate method?
Q3 what is impact on income statement, as ABC practice flat rate?
You have to book interest expense on the basis of effective intrest in the income statement . While your cash fow will be on the flat rate baiss . This difference is basicallly the amportization
1. Loan is market based.
2. Duration: 12 month
3. Repayment frequency is monthly
If need further information, please do let me know.
can tell me the address of any website, where i can get the IAS39 in simple language and in details along with example. if you know any book for this,please refer it
thanks in advance
I suggest the good website