When arranging a long term loan mortgage fees are paid. Are these fees to be considered as ancillary borrowing cost and should be included in calculation of the effective interest rate?
Ilian Dimitrov Gotzev
[New Post] Borrowing cost – http://www.ifrslist.com/2010/04/borrowin…
[…] admin wrote an interesting post today. Here’s a quick excerptWelcome to IFRSLIST.com, the free community where you can find resources, share experience, knowledge and ideas about IFRS, bAccounting/b and Auditing with more than 1.5k members. Sign-up and start a new discussion. … […]
Sure, if they are directly attributable to raising the financing
Undoubtedly, following the requirements of IAS 39 and IAS 1 (look the definition of an asset) such kind of expenditures is directly connected with cost of financing and must be taken into account in calcutaltion the effective interest rate and recognized in the appropriate way.
The mortgage fees reduces the net inflow of long term loan and hence needs to be factored in for effective interest rate computation
You must be logged in to post a comment.