Ias 39

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Mohammad Mudassir (Querist)
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19 May 2013 Loan availed 50 million payable after 10 years at 0 % interst rate. What would be the accounting treatment if i book my liability at its present value lets say 40 million . kindly guide me in the line of IAS 39. What would be overall treatment in the first year, and for the next 10 years. Kindly provide immediate guidance

CA Sourabh Agarwal

CA Sourabh Agarwal (Expert)
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21 May 2013 Firstly find out interest rate that is prevalent under normal circumstances considering time and quantum of loan.

Then calculate PV of 50 million payable after 10 years at such interest rate. It will be classified as Financial Liability (FL) in books.

Show this FL at Amortised Cost every year. It will be Initial recognition plus interest (rate as above) less any payments (nil in your case).

Interest charges is shown under finance charges.