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+--- Thread: IAS 39 treatment for advances to employees (/showthread.php?tid=6917)
IAS 39 treatment for advances to employees - golgi - 12-02-2009
AOA
I have the following queries regarding Advances given to employees.
our company gives interest free loan to employee for motorcycles please tell me the accounting entries that should be passed in order to fulfill the requirements of IAS 39, so please answer the following example;
Company X has given an interest free loan of amounting Rs. 20,000 to Mr. A for motorcycle; Mr. A will return this loan by paying 250 per month. Company's effective cost of borrowing is 10% P.a.
I shall be extremely thankful for early response.
Regards
- kamranACA - 12-03-2009
Dear
IFRSs are not supposed to be applied on immaterial items. I am of the view that if loans given to employees in aggregate do not make up a material figure then you should state them at cost (carrying amount) with a disclosure that fair valuation under IAS 39 has not been done due to immaterial amounts.
However, if you feel like doing so t every cost, following accounting enteries will be passed
At the time of disbursement of loan
First entry
....Loan account (debit)
.........Cash/bank account (credit)
(at actual disbursement amount)
Secodn entry
....Finance cost (debit)
..........Loan account (credit)
(this entry will be made for the fair value effect over 6.67 years (Rs 3000 per yer) period discounted at 10 percent that is assumed to be open market rate)
At the end of first reporting period
......Loan account (debit)
.............Other operating income (credit)
This entry will be passed at each reporting period to proportionately reverse the fair value loss booked above (in second entry) over the entire period of loans i.e. 6.67 years approxmately.
This entry will bring the complete balance of Loan account back over the entire period.
When recovery is made
......Cash/bank account (debit)
..............Loan account (credit)
Sometimes loan recoveries are adjusted against Salaries Payable accounts and not settled in cash. In such situation last entry may be modified accordingly.
If you know how the figures will arrive at, let me know. This will require a bit of calculation of fair value and preparation of an amortization schedule.
I hope you can do it at your own.
Regards,
KAMRAN.
- golgi - 12-03-2009
Thanx a lot
I shall be very thankful to you if you provide me the detail calculation of your suggested answer.
- kamranACA - 12-04-2009
Dear
I have prepared the valuation model in excel sheet. It took almost 15-20 minutes since the model was already in place and, change of a few inputs, done the job. However, it cannot be pasted here.
I recommend the moderators to give an option of uploading files as attachments, if it can be possible. This may be done by allocating a separate sub-froum or place where members can upload such files for others to use without going to personalized email addresses.
For the time being send me your e-mail address and I will send you valuation model and accounting entries in return.
Regards,
KAMRAN.
- golgi - 12-05-2009
golgi2004@yahoo.com
- kamranACA - 12-05-2009
Dear
The fair valuation methodlogy, present value amortization model and accounting entries for 7 years have been emailed to you.
People at general (except fresh qualified ones and the professionals in practice) don't know how to do this under IAS-39. So keep it as an informational asset though it is a very small exercise.
Regards,
KAMRAN.
- mrafaykhan - 12-10-2009
Dear Kamran Bhai,
Kindly send that excel file at my id muhammadrafay@yahoo.com
Kind Regards,
Muhammad Rafay
- ARSH - 11-09-2011
Dear Kamran bhai,
kindly mail the file at get_arsh@yahoo.com I shall be highly obliged.
Regds
- Information Consultant - 11-11-2011
Dear Kamran
Pls send at faisal@ic-infocon.com
- hassan22 - 11-28-2011
Dear Kamran bhai
please also give me this favour
rehan_hassan22@yahoo.com
RE: IAS 39 treatment for advances to employees - adnansiddiqui12 - 10-09-2014
Dear Kamran
Kindly also send me the file at fac.adnan@gmail.com
Thanks & regards
Adnan
RE: IAS 39 treatment for advances to employees - genius007ufo - 01-27-2015
Can you please send it on the following
genius007_ufo@yahoo.com