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Fair value of Security deposit

Lokesh Chauhan (Manager) (27 Points)

02 April 2020

Is non current security deposit given which is under litigation needs to be fair valued as per Ind AS?

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yasaswi gomes (My grammar is 💯 good I) (7290 Points)
Replied 02 May 2020

It depends upon what kind of security deposit it is. As per my assumptions, a security deposit is a certain amount of cash or non monetary item like gold or property pledged. As cash is held only for short term, it need not be revalued eg. room rent advance. Gold value appreciates and depreciates, so this can be revalued for your financial statement reporting purposes. Similarly, Property can be revalued in your financial statements. One should note that, redeeming securitisation of illiquid assets will not impact the other party(as long as you clear out your liabilities, you can expect to receive your collateral back without any reduction of fair value of the collateral), and the fair values of the assets revaluation will reflect on your statements and banks statements (until securitisation maturity period). During a dispute, the fair value of the current securitised/collateral value is most relevant. This again depends upon the banks and your company’s revaluation policy i.e., how frequently do you revalue your assets.