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Hi forum, I was hoping someone on the forum could explain to me in Lehman terms the reasoning behind the answer to Q.4 part b regarding the FV part of the question. The answer states that there would be a net profit of $2 mil and and unrealised gain of 4.35 mil. I just don’t really understand the accounting logic to why the carrying amount of the intital loan would be carried at $45 mil. Can anyone help me understand? Thanks in advance
Ruairi, I suggest that you stop looking at this question / answer straight away! It’s an IAS 39 question and the standard has been replaced by IFRS 9
Much better to get on top of the new IFRS than wonder about what used to happen in the good old days
Ok?
thank you for the reply. How that question be handled then under the new IAS 9? It’s strange that the book would not amend that question. I got this from the BPP revision book questions book.
Ruairi, there’s absolutely no way that I can summarise this for you. Put into your search engine ifrs9 and select the second entry “IFRS 9 project summary”
It’s quite readable and hopefully fully answers your question. It’s 32 pages long but not at all boring (well, not a lot boring anyway) and it’s well worth a read.
Do that for me and then, if you’ve still got a problem, post again
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