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minco contract is to promote and advertise for her brand image, by doing so she has a contract with tennis players.
the costs are not interrelated- first- the player receives $20k for signing the contract, this is a prepayment costs and should be paid to players once the services are is received. is this cost a one off payment? i.e not to be paid each year. is this cost to be capitalize, if so why?
the 50k is recognized once the players have completed all tournaments for the year, why is this in accordance with ifrs 9? although ifrs 9 has a contractual terms of the financial asset gives rise on specified dates to cashflows that solely payments or principal and interest on the principle amount outstanding. this criteria is met in relation to the $50, however ifrs 9 also states that entity has the contractual right to collect cashflows. does this mean that minco collects cashflows if the players wins the tournament she receives a bonus of 20%, hence qualify for ifrs 9.
It’s a one-off payment
Kerri, I seem to remember that this is clearly explained within the examiner’s answer! Or am I wrong? May I ask that you re-read the examiner’s answer and, if you still have a problem understanding it, please post again
Thanks
I did read it, I don’t understand the ifrs 9 part. as the solutions did not mention anything abt ” contractual right to receive cash”
to meet the criteria of ifrs 9. (I) ifrs 9 has a contractual terms of the financial asset gives rise on specified dates to cashflows that solely payments or principal and interest on the principle amount outstanding (ii) right to receive cash.
(i) is met what about (ii)?
The question specifically says that “Minco has a contractual obligation to deliver cash to the player and, hence, recognises a financial liability during the period,” yet you say that “as the solutions did not mention anything abt contractual right to receive cash”
Incidentally, we’re looking at a financial liability for Minco, not a financial asset for the tennis player
ok, yes i understand, that applies to financial asset, so can this be ias 39?
but recently ias 39 has been replaced bu ifrs 9, so in exam if a question comes up on debt instrument, will i say its ifrs 9 or ias 39?
Both IAS 39 and IFRS 9 are included as examinable documents! Am I not correct that IFRS 9 does not comprehensively cover the entire world of financial instruments and therefore bits of IAS 39 are still relevant?
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