IAS 36 and Prepayment: Difference between pages

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International Accounting Standard 36, dealing with impairment of assets.
1. ''Banking''.


Issued by the International Accounting Standards Board.
The non-contractual early repayment by bank customers of, for example, fixed rate mortgages.




IAS 36 seeks to ensure that an entity's assets are not carried at more than their recoverable amount (i.e. the higher of fair value less costs of disposal and value in use).  
2. ''Accounting''.


With the exception of goodwill and certain intangible assets for which an annual impairment test is required, entities are required to conduct impairment tests where there is an indication of impairment of an asset, and the test may be conducted for a 'cash-generating unit' where an asset does not generate cash inflows that are largely independent of those from other assets.  
An amount paid in advance for a financial benefit, represented by an asset in the organisation's balance sheet.


It is a prepaid expense.


== See also ==
 
* [[Cash-generating unit]]
<span style="color:#4B0082">'''''Example: Venue hire'''''</span>
* [[Fair value]]
 
* [[FRS 102]]
We book a venue for a function.
* [[Goodwill]]
 
* [[IFRS 9]]
And pay 50% of the hire fee in advance.
* [[Impairment]]
 
* [[Intangible assets]]
 
* [[International Financial Reporting Standards]]
 
* [[Value in use]]
The 50% paid in advance is an ASSET for us.
 
We are going to enjoy the use of the venue in future, but it has already been paid for.
 
So the 50% already paid represents a future economic benefit.




==External link==


[https://www.iasplus.com/en/standards/ias/ias36 IAS 36 IAS Plus]
== See also ==
* [[Accrual]]
* [[Average effective maturity]]
* [[Bookkeeping]]
* [[Early Repayment Charge]]
* [[Extension risk]]
* [[Prepaid expense]]
* [[Prepayment risk]]
* [[Prepayments]]


[[Category:Accounting,_tax_and_regulation]]
[[Category:Accounting,_tax_and_regulation]]
[[Category:Corporate_finance]]
[[Category:Identify_and_assess_risks]]
[[Category:Compliance_and_audit]]
[[Category:Manage_risks]]
[[Category:Risk_frameworks]]

Revision as of 10:41, 16 September 2020

1. Banking.

The non-contractual early repayment by bank customers of, for example, fixed rate mortgages.


2. Accounting.

An amount paid in advance for a financial benefit, represented by an asset in the organisation's balance sheet.

It is a prepaid expense.


Example: Venue hire

We book a venue for a function.

And pay 50% of the hire fee in advance.


The 50% paid in advance is an ASSET for us.

We are going to enjoy the use of the venue in future, but it has already been paid for.

So the 50% already paid represents a future economic benefit.


See also

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