Questions & Answers

Should we apply ECL model under IFRS 9 if we have only trade receivables?

Question: We do not have any financial assets, except for trade receivables. Do we have to apply Expected Credit Loss rules under IFRS 9? Answer Yes, of course, because the trade receivables are in fact financial assets at amortized cost under IFRS 9. However,…

Are income tax advances financial instruments?

Question We paid significant amount of cash as advances for income tax liabilities in accordance with our tax legislation. Are these prepayments for tax financial assets? Should we include them in expected credit loss calculation? If not, what standard shall we apply? Answer No,…

Measurement of trade receivables under IFRS 9

Question IFRS 9 classifies financial assets into several categories: at amortized cost, at fair value through profit or loss or at fair value through other comprehensive income. How do you classify trade receivables and how do you measure them initially, especially when they are not…

Accounting for gain or loss on sale of shares classified at FVOCI

Question We have shares (equity instruments) purchased for CU 100. We classified them as at fair value through other comprehensive income (FVOCI), because we collect dividends from them, but occasionally we make profits from trading of these shares. One year after purchase, the fair value…

Accounting for loan refinancing fees

Question We took a mortgage loan 3 years ago and we paid the loan origination fees. We classify the loan at amortized cost and we adjusted the effective interest method for that fee. Now, after 3 years, we want to refinance mortgage loan with the…

Non-controlling interest in a private company

Question Under IFRS 9, equity instruments must be revalued at fair value through profit and loss or OCI. What happens if a company purchases non-controlling interest in a private company? Is the private company revalued every year to comply with IFRS 9? Answer Before…