02-19-2009, 10:05 PM
Star/Uzair
If you will open two accounts of a similar party on debit and credit side and will gross up their balances to present in the Balance sheet, it would not be in line with IASs.
Star, please remember there is nothing in accounting which could be done without considering the reporting frame-work (e.g. IFRSs). I stress nothing means nothing. You may one day understand it.
I wish you guys should read IAS 32. Its paragraphs from 32-50 along with application guidelines paragraphs AG38 to AG39 may help you clearing your concepts.
Uzair, first I must tell you that in your previous post you quoted paragraph 2 of IAS 1 instead of paragraph 32. It may be due to typographical error. Further, paragraph 32 of IAS 1 is a broad guideline and makes such offsetting subject to all other IASs/IFRSs to follow. It states that such offsetting will not be made unless it is REQUIRED or PREMITTED by a standard or an interpretation.
If you will read the paragraphs of IAS 32 referred by me, you will come to know that this standard used the following words
QUOTE
A financial asset and a financial liability SHALL BE OFFSET and the net amount presented in the statement of financial position when, and only when, an entity
(a) currently has a legally enforceable right to set off the recognised amounts; And
(b) intends either to settle on a net basis, or to realise the asset and settle the liability simultaneously.
UNQUOTE
The words "SHALL BE OFFSET" have been used instead of "permitted to offset". This makes it a requirement if you can understand. Now whether the conditions of offsetting are fulfilled are not, is the only question. I don't find any issue with it in the circumstances written by the person who made this particular query. If you do find something please let me know.
I hope this may clarify the things.
Yes, in the end I must again say that nothing in accounting can happen without considering the guidelines of applicable reporting framework, whatever is it.
Regards,
KAMRAN.
If you will open two accounts of a similar party on debit and credit side and will gross up their balances to present in the Balance sheet, it would not be in line with IASs.
Star, please remember there is nothing in accounting which could be done without considering the reporting frame-work (e.g. IFRSs). I stress nothing means nothing. You may one day understand it.
I wish you guys should read IAS 32. Its paragraphs from 32-50 along with application guidelines paragraphs AG38 to AG39 may help you clearing your concepts.
Uzair, first I must tell you that in your previous post you quoted paragraph 2 of IAS 1 instead of paragraph 32. It may be due to typographical error. Further, paragraph 32 of IAS 1 is a broad guideline and makes such offsetting subject to all other IASs/IFRSs to follow. It states that such offsetting will not be made unless it is REQUIRED or PREMITTED by a standard or an interpretation.
If you will read the paragraphs of IAS 32 referred by me, you will come to know that this standard used the following words
QUOTE
A financial asset and a financial liability SHALL BE OFFSET and the net amount presented in the statement of financial position when, and only when, an entity
(a) currently has a legally enforceable right to set off the recognised amounts; And
(b) intends either to settle on a net basis, or to realise the asset and settle the liability simultaneously.
UNQUOTE
The words "SHALL BE OFFSET" have been used instead of "permitted to offset". This makes it a requirement if you can understand. Now whether the conditions of offsetting are fulfilled are not, is the only question. I don't find any issue with it in the circumstances written by the person who made this particular query. If you do find something please let me know.
I hope this may clarify the things.
Yes, in the end I must again say that nothing in accounting can happen without considering the guidelines of applicable reporting framework, whatever is it.
Regards,
KAMRAN.
