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IFRS 9 – Measurement of Interest Free Loan

Forums › Ask ACCA Tutor Forums › Ask the Tutor ACCA SBR Exams › IFRS 9 – Measurement of Interest Free Loan

  • This topic has 1 reply, 2 voices, and was last updated 7 years ago by AvatarP2-D2.
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  • August 25, 2018 at 5:11 am #469317
    Avatarrahulojha
    Participant
    • Topics: 1
    • Replies: 0
    • ☆

    Hi Sir, In question 3 of 2016 (Sept) paper, there was a question on interest free loan. I want to understand how is interest free loan measured?

    1) At fair value (net proceed) – (specified in the lecture) or
    2) As the present value of all future cash flows discounted using the prevailing market rates for similar instruments – (mentioned in the answer)

    August 26, 2018 at 8:26 am #469487
    AvatarP2-D2
    Keymaster
    • Topics: 4
    • Replies: 7232
    • ☆☆☆☆☆

    Hi,

    In accounting for the interest free loan we need to use substance and therefore record the initial recognition at the present value of the cash flows to record it at fair value.

    Thanks

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