INTERESTS

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Not-for-profit organizations

In Canada, public companies and financial institutions (generally) will be adopting IFRS in 2011. Private companies will have the choice between IFRS and or local Canadian standards specifically for them. It has not been announce yet what will happen w...

By |December 14th, 2008|AUDIT, DOCUMENTS, FINANCIAL INSTRUMENTS, IFRS, OTHER, TAX|0 Comments

IAS 23 Borrowing costs – Interest-free loans

As per IAS 23, borrowing costs on qualifying assets should be capitalised: To the extent that an entity borrows funds generally and uses them for the purpose of obtaining a qualifying asset, the entity shall determine the amount of borrowing costs eligible for capitalisation by applying a capitalisation rate to the expenditures on that asset. The capitalisation rate shall be the weighted average of the borrowing costs applicable to the borrowings of the entity that are outstanding during the period. What if a company has interest free loans from shareholders in addition to interest-bearing loans from financial institutions? Do you take into account the effective interest income due to the interest-free loan (effectively lowering the WACC)? This is quite common as banks often only finances a construction project partially, and the rest of the funds are added by shareholders. Your feedback would be must appreciated! Best regards                 […]

By |August 28th, 2008|OTHER IFRS|0 Comments

IAS 23 Borrowing costs – Interest-free loans

As per IAS 23, borrowing costs on qualifying assets should be capitalised: To the extent that an entity borrows funds generally and uses them for the purpose of obtaining a qualifying asset, the entity shall determine the amount of borrowing costs eligible for capitalisation by applying a capitalisation rate to the expenditures on that asset. The capitalisation rate shall be the weighted average of the borrowing costs applicable to the borrowings of the entity that are outstanding during the period. What if a company has interest free loans from shareholders in addition to interest-bearing loans from financial institutions? Do you take into account the effective interest income due to the interest-free loan (effectively lowering the WACC)? This is quite common as banks often only finances a construction project partially, and the rest of the funds are added by shareholders. Your feedback would be must appreciated! Best regards                Allan […]

By |August 28th, 2008|OTHER IFRS|0 Comments

Accounting Treatment of "Arrangement fee" paid to bank for term loan

Dear All   Please advise your views whether subject item does come under the scope of IAS 23 or IAS 39. The loan facility is repayable in 30 years and interest rate is variable interest rate and we hedge the interest rate by taking interest swap contracts with banks.   In case someone needs more [...]

By |August 27th, 2008|IFRS|0 Comments