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Company has unsecured unquoted debenture (Under Loan and receivable category in financial statement), which doesn’t recognized amortized cost using effective interest rate (From 2007), due to the uncertainty of recoverability, but in this year (2016) company going to account whole interest as this year income instead of correcting the error.

Is this correct way of recording the interest income for the given scenario?
in IAS 39 - Financial Instruments: Recognition and Measurement by Level 1 Member (1.5k points)

1 Answer

0 votes
The company should have recorded financial assets (under loans and receivables category) at amortised cost. If there was a doubt of recoverability, it could be covered by recording an impairment loss. Therefore, this constitutes an accounting error within the meanings of IAS-8 and should be corrected retrospectively.
by Level 3 Member (7.2k points)
Thank you for your valuable time to answer my question.