![]() ![]() ![]() The question we want to address is, how should such deferred financing cost/s be accounted for? all of which can be grouped together under a generic name – “Deferred Financing Cost”. Such cost as Brokerage fee, Loan Origination Fees, etc. There may be costs associated with the acquisition or sale of the financial instrument. A loan or, any financial instrument can be purchased or sold at premium or discount. In case of Mortgage loan, both interest and principal are, in most cases, paid periodically until repayment is made in full or a balloon payment is made to extinguish the liability. When a loan is taken interest is paid periodically and the principal is repaid at the end of the period. This write up will focus on accretion of loan cost using the effective interest method Amongst other provisions, it requires that loan cost (cost of borrowing) should be amortized using the effective interest method. IFRS 9 specifies how an entity should classify and measure financial assets, financial liabilities. In substance and form, IAS 39 Financial Instruments morphed into IFRS 9 without any substantial change. ![]()
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