The article deals mainly with the COLLATRERAL which is non-cash in nature and an agreement or custom (common business practices) exists which defines the rights and obligation attached to the collateral for transferee (who receives such collateral) and for transferor (who provides such collateral).
Fair Values are being used as one of the measurement requirements to recognize certain transactions/ Assets/ Liabilities as required by respective Accounting Standards (i.e. Ind-As).
Almost every loan agreement will be carrying some of the terms and conditions that are required to be fulfilled by a borrower to keep that loan continue as per the agreed terms OR an immediate re-payment might be initiated which can end the relationship related to the debt. Often these terms are e.g. agreed debt […]
The term extension clause could be kind of automatic or could be at the option of borrower which indicates that if the rates at which the extension can be done is below market rate then borrower will surely go for extension.
Normal sale and purchase transactions (i.e. non financial instruments) which are being done based on delivery basis still can contain embedded derivatives in case of payments have been contracted in foreign currency.
Leased Assets are being given to earn rentals and all future rentals normally should be agreed in a way where it can actually beat inflation amount to keep that earning relevant for owner of assets.
In finance, a credit derivative refers to any one of various instruments and techniques designed to separate and then transfer credit risk or the risk of an event of default of a corporate or sovereign borrower, transferring it to an entity other than lender or debtholder.
In continuation of previous articles Double-double test, Caps & Floor & Call/Put/ Prepayments – Embedded Derivatives as per Ind-As/ IFRS, Foreign currency denominated bonds/debts are very common in practice and these are being issued for payments into some foreign currency either for Principal or Interest related payments.
Many times Goods and Services are being sold/ rendered by using different kind of arrangements/ entities based on terms and conditions which could change Revenue Recognition criteria in its entirety and a careful assessment is always required because if any incorrect assessment is done it could have a significant impact on amount of revenue.
At present all Investment are being classified between long term and current and are being recognized at cost (subject to some permanent diminution and in case current investment lower of fair value or cost) , hence what are the options available to value Equity Investments under Ind-As?
