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sir this comes as very strange to me. but is that right that if a loan has been given to an employee at 0% inters rate then the loss will be accounted for under IAS 19 employee benefits as employee remuneration. and The employee compensation would be charged to profit or loss over the period. Recognising it on a straight line basis equal parts charged to each period, and the remaining will be recognised as a prepayment on the statement of financial position.
And what if we don’t talk about it in this manner. Because i simply thought that it would be treated as with any other entity, the same rules of converting to PV and accounting for loss, nothing like the former stuff on employee compensation.
would i los marks for such a simplistic calculation, which is devoid of complexities. Or those complexities are in fact necessary to score full marks?No – if you worked out that FV needs you to discount the amount of the loan, you are already in prize winner corner. If you put down everything in the answer you will score 200% and 100 will then be deducted because you are too clever.
The question does come up reasonably often, though. You can probably see that the discount is a ‘sort of’ employee benefit’.
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