Forums › Ask ACCA Tutor Forums › Ask the Tutor ACCA SBR Exams › Initial Recognition of Financial liability.
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- April 28, 2017 at 9:01 pm #384254
Dear Sir,
I have two scenario as follow for the initial recognition of financial liabilities:
1. A company obtained loan from bank of AED 10 million, bank arrangement fee is AED 75,000 and financial consulting firm fee is AED 350,000. Interest rate is Local interbank rate+7. Loan is maturity is 3 year but repayment installment will start after six months since the starting of loan duration.
At what amount should i initially recognized the loan amount at year end .
2. Secondly, finance consulting firm also arrange an equity investor, who invest AED 2 million and consulting firm charged a fee of AED 400,000. how will i treat the arrangement fee?
May 1, 2017 at 7:45 pm #384497Hi,
I don’t quite follow what is being said in the last sentence of the first scenario, sorry. If you give me more detail then I may be able to help.
In the second scenario, we recognise the liability at the AED 2.4 million. The arrangement fee is attributable to the loan and is included within the value of the initial liability.
Thanks
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