IAS 36 and Prepayment: Difference between pages

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International Accounting Standard 36, dealing with impairment of assets.
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.
 
 
<span style="color:#4B0082">'''''Example: Venue hire'''''</span>
 
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.


Issued by the International Accounting Standards Board.




== See also ==
== See also ==
* [[FRS 11]]
* [[Accrual]]
* [[Impairment]]
* [[Average effective maturity]]
* [[International Financial Reporting Standards]]
* [[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