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Hey,
I was wondering if any of you have any idea of an answer to a hypothetical…..
K, Company A is carrying a balance on deferred revenue which is effectively being treated under IFRS as a loan and will stay there for three years before being transferred on straight line to Revenue on the P+L for 15 years.
As it’s being treated as a loan interest is hypothetically payable and is being accounted for though in reality will be offset against the revenue figure once it starts being pulled from the BS and accounted for on the P+L as revenue.
The question I have surrounds the time value of money.
As the balance is being carried for well over a decade obviously the amount will devalue in real terms however in order to maintain a true and fair view I’m assuming you’d have to account for it somehow…
My question is: what and how would you do it?
Thanks in advance for all your inputs!
iam confused your case is about a loan given to x and x is liable to pay the principle plus a certian agreed interest . first the revenue comes from the loan is to be treated as other receivanle or othe rincome and shouldnt be offset against the revenue coming from ordinary course of business .
Second concern the loan interest it shouldnt deffered and consumed over the loan period is should be treated as revenue in P&L once received so no time value of money is concerned .
Hope this will help .
Regards,
Hisham
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