• Register
Search Questions / Answers

Welcome to AccountantAnswer Forum, where you can ask questions and receive answers. Although you need not be a member to ask questions or provide answers, we invite you to register an account and be a member of our community for mutual help. You can register with your email or with facebook login in few seconds

Get AccountantAnswer App

Recognition of interest income of Unquoted Unsecured Debenture

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?

asked Jan 9, 2017 in IAS 39 - Financial Instruments: Recognition and Measurement by angelo Level 1 Member (1,450 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.
answered Jan 11, 2017 by Mian Musawar Level 3 Member (7,160 points)
Thank you for your valuable time to answer my question.