4/11/2024 0 Comments Loan arrangement fees![]() ![]() The ‘amortised cost (of a financial asset or financial liability)’ is defined in the Glossary to FRS 102 as: The amortised cost method was a new method for most accountants and the way it works in practice was initially unfamiliar. One of the challenges faced by AAT Licensed Accountants is how to account for financial instruments such as bank loans under FRS 102. Accounting for a straightforward bank loan under FRS 102 This will result in a small number of financial instruments now being eligible to be treated as basic and accounted for under the amortised cost method rather than non-basic at fair value under Section 12. The inclusion of a description of a basic financial instrument in paragraph 11.9A means that if the financial instrument fails to meet the detailed conditions in paragraph 11.9, but meets the description of a basic financial instrument, the instrument can still be classed as basic. Prior to the introduction of paragraph 11.9A, a financial instrument could only be classed as basic if it met all the detailed conditions in paragraph 11.9. The FRC included an additional paragraph 11.9A which provides a description of a basic financial instrument. There two exceptions in respect of the directors’ loan account amendment (see FRS 102 (March 2018) paragraph 11.13A) and the gift aid amendments (see FRS 102 (March 2018) paragraph 29.14A) which can be early adopted separately without having to early adopt FRS 102 (March 2018). Early adoption of the triennial review amendments is permissible, provided all of the amendments are applied at the same time. The March 2018 editions of UK GAAP are mandatory for accounting periods commencing on or after 1 January 2019. ![]() The triennial review, which was completed by the Financial Reporting Council (FRC) in December 2017 gave rise to new FRSs being issued in March 2018. ![]() Most, if not all, reporting entities will have some financial instruments which are treated as basic financial instruments, such as: FRS 102 The Financial Reporting Standard applicable in the UK and Republic of Ireland deals with financial instruments in two sections: Section 11 Basic Financial Instruments and Section 12 Other Financial Instruments Issues. ![]()
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