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forward/call option – Repurchase agreements

Forums › Ask ACCA Tutor Forums › Ask the Tutor ACCA FR Exams › forward/call option – Repurchase agreements

  • This topic has 1 reply, 2 voices, and was last updated 5 years ago by P2-D2.
Viewing 2 posts - 1 through 2 (of 2 total)
  • Author
    Posts
  • May 7, 2020 at 3:30 pm #570261
    elizamargaret
    Member
    • Topics: 8
    • Replies: 5
    • ☆

    Hi there,

    If a forward/call option is accounted for as a lease under IFRS 16 when the repurchase amount is less than the original selling price, where does the gain go to when the option is carried out? The original amount paid is recognised as a financial liability and then the entity buys back the asset but at a lower price, so where does the difference go?

    The BBP text book gives an example for a forward/call option where the repurchase price is equal to or greater than the original selling amount and the excess payment over original selling price goes to interest expense. Should the above go to interest received?

    Thanks a mill!
    Eliza

    May 10, 2020 at 3:39 pm #570495
    P2-D2
    Keymaster
    • Topics: 4
    • Replies: 7163
    • ☆☆☆☆☆

    Hi,

    I think you’ve posted this question in the wrong forum as this is not an FR related question. It sounds like it would be better suited to SBR.

    Thanks

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