![]() ![]() Well, you can learn more about the classification of loans in the podcast episode n. If you take action today and subscribe to the IFRS Kit, you’ll get it at discount! Click here to check it out! Have you already checked out the IFRS Kit ? It’s a full IFRS learning package with more than 40 hours of private video tutorials, more than 140 IFRS case studies solved in Excel, more than 180 pages of handouts and many bonuses included. I guess most of the retail loans provided by banks to the customers is indeed measured at amortized cost, because they usually meet the two criteria for amortized cost measurement. If you classify the financial asset at fair value through other comprehensive income or at amortized cost, then the transaction costs enter into the initial measurement of the financial asset.If you classify the financial asset at fair value through profit or loss, then you must recognize the transaction costs in profit or loss when they arise.Here, I’m going to focus on financial assets, because the question relates to the bank providing a loan, thus generating financial assets: This is fully recognised as income in profit or loss because management states that it is directly linked to freely transacting via Bank’s agent network across the country along with administrative fees limited to cost of stationeries, credit checks, security and business appraisal.įirst of all, the treatment of all these transaction costs depends on how you classify the financial instrument. Currently we are using straight-line as an alternative for effective interest method, and ![]() ![]() Loan Origination Fee of 1 % is amortized over the loan period.However such fee is divided into two categories: “I work for a banking industry and my bank is charging a fee of 3% for each loan issued to customers on some of loan categories. ![]()
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