Forums › Ask ACCA Tutor Forums › Ask the Tutor ACCA SBR Exams › Impairment and Current Issues
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- May 21, 2016 at 7:08 pm #316273
Hi Mike
i have 3 questions. i appreciate your advice please
1) What is the best way to prepare for the current issues question 4? i am trying to master all technical articles on acca website for p2. would this be sufficient for question 4?
2) ifrs 9 impairment. I understand that ifrs 9 impairment does not apply to FVPTL because when we measure the asset at fv each year then we take impairment into account anyways. however i dont understand we do we apply this impairment treatment for asset through FVOCI? how can a bond be designated at FVOCI? i thought FVOCI is only for equity instruments.
3) ifrs 9 says we have 12 month allowance for impairment on initial recognition. so lets say we have a 3 year 10,000 10% bond with effective rate also 10% and 12 month loss allowance is 500
so in year 1 we do the following calculation.
Year 1: 10,000 + 1000 (int charge) – 1000 (int rec) = 10,000 closing bal – 500 (12 month loss allowance) = 9500 carrying amount (this fig goes to sfp)
now lets say we dont have any further information regarding further increase in risks etc
so is the following calculation for year 2 right?
Year 2: 10,000 + 1000 (int charge) – 1000 (int rec) = 10,000 closing bal – 500 (12 month loss allowance) = 9500 carrying amount
do we continue to charge the 12 month allowance 500 in each year or do we only need to charge this once in year 1
May 22, 2016 at 12:53 pm #316382Hi,
1) This sounds like a perfectly sensible way to get ready for the current issues question. I’d also recommend looking at the most recent current issues questions so that you become familiar with the style of question.
2) Any decrease in value on FVTOCI usually goes through OCI, so the impairment would ensure that any permanent reduction is taken through profit or loss.
3) If there is any movement in the allowance then we would account for it but given there is no movement in the second year then we just leave it at its original figure.
Thanks
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