What does Interest represent?
Interest represents only the consideration for the passage of time. Do you agree?
While interest is predominantly the consideration for time value of money, it also includes consideration for the credit risk associated with the principal amount outstanding during a particular period of time. It also includes consideration for other basic lending risks and costs as well as a profit margin. Contractual cash flows representing solely payment of principal and the interest (SPPI) on the principal amount outstanding are consistent with a basic lending arrangement. The two significant elements of interest are:
- Consideration for the time of value of money
- Credit risk associated with the principal and interest
In extreme economic circumstances, interest can be negative where the holder of a financial asset pays for the deposit of its money. Where the contractual term gives rise to an exposure to risks or volatility in the contractual cash flows, which is considered to be unrelated to the basic lending arrangement, such contract does not give rise to cash flows that are solely payments of principal and interest.
Effective Rate of Interest – EIR
Are RBI circulars relevant for ECL computation as per Ind AS 109?
What is a Financial instrument?
Is there a choice to designate as FVTPL?
What are treasury shares and how are these presented
Contract to deal in non-financial item
Can a corporate entity still follow settlement date accounting?
Gains and losses on assets measured at FVOCI
Separately accounting for an embedded derivative
Derecognition of a financial asset
Foreign currency risk in a firm commitment as a fair value hedge
Treatment of transaction costs
Derecognise financial assets/financial liabilities retrospectively
Modification of contractual cash flows
Own use exemption as per the Accounting Standard
Difference between amortised cost & held-to-maturity
Accounting treatment for FVOCI Instruments
What is the concept of effective interest method?
First-time adoption while classifying a financial instrument
SPPI test & business model objective test
Current standards for financial instruments as per AS?
Contract is settled through the entity’s own equity instrument
Financial asset categorised as FVOCI
What is an embedded derivative?
Impairment model for different categories of financial assets
Ind ASs relating to financial instruments
FVOCI (equity instruments) and FVOCI (debt instruments)
Classification of derivative instruments
Reclassification of a financial asset
Debt instrument measured at FVOCI
Change in contractual cash flows
Loss allowance as per Ind AS 109
Ind AS for financial instruments replica of IFRS?
Contractual cash flows & effective interest rate
Long-term financial liability classified as FVTPL
Credit adjusted effective interest rate
Effective rate of interest during the first-time adoption
Consequence of not de-recognising an asset after the sale
Designation of contracts deal a non-financial item on first time adoption
Recognition of financial instruments on first-time adoption
Gains and losses on a financial instrument
Gains and losses from liabilities designated as FVTPL
Measurement categories for financial assets
Difference between time value of money and modified time value of money
