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Ifrs 9 Cash and Receivables
Ifrs 9 Cash and Receivables
Standards (IFRS)
&
International Accounting Standard (IAS)
Cash and Cash Equivalents
(IAS-7 & IAS-39/IFRS-9)
Trade & Other Receivables
(IAS-18/IFRS-15, IAS-32 & IAS-39/IFRS-9)
This material is the property of Department of Accounting and Finance, CoBE, AAU.
1
Physical
Assets
Assets
Financial
Assets
Derivatives
6
Applicable Standards
Accounting for Cash and Cash Equivalents is
mainly governed by:
IAS 7 - Statement of Cash Flows
IAS 39 - Financial Instruments:
Recognition and Measurement, &
IFRS 9 - Financial Instruments:
Classification, Recognition, Measurement,
Impairment, and Hedging.
Cash:
Comprises of cash on hand & on demand
deposits!
Held in the form of currencies & notes!
Notes & Coins comprising foreign currency!
Bank overdraft if payable on demand (for
the lender)!
Sinking Fund.
Proceeds of a Construction Mortgage
Funds allocated for Special Purposes by
action of the company’s board of directors.
DIFFERENCE
GAAP does not allow offsetting bank
overdrafts against the cash account,
but IFRS does!
IFRS includes bank overdrafts in the
cash & cash equivalents category if
they are repayable on demand!
Trade
Receivables
Non-trade
Originated by
the Entity
Receivables
Acquired/
purchased
?
(Held for Trading, or Held to Collect Contractual Cash Flows)
Subsequent Cost
Measurement
Fair
Value
Solution
The effective interest rate (IRR) is calculated as
the rate that exactly discounts estimated future
cash flows through the expected life of the
instrument.
100,000 = 6000/(1+IRR)1+ 8000/(1+IRR)2
+10000/(1+IRR)3 + 12000/(1+IRR)4 +
(18000+100000)/(1+IRR)5
Solving this equation on excel we get an
IRR = 10.2626%