Uday Kanth
Consultant
[ Scorecard : 71]
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Posted On 08 September 2009 at 18:53
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IAS 18 talks about revenue and it states, for Interest it should be recognised as follows.
Interest on time proportion basis that takes into account the effective yield.
Can some one please explain what does this mean?
1. Recognistion of interest on time proportion?
2. What is effective yield here?
regards
Uday Kanth
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Mohan Dagha
"IFRS CRAZY" Chartered Accountant
[ Scorecard : 756]
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Posted On 08 September 2009 at 19:19
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Recognistion of interest on time proportion means on proportion basis if year end is dec 2009 and interest is from october 2009 to september 2010, than time proportion means 3 months and 9 months
effective yield means rate of interest
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Uday Kanth
Consultant
[ Scorecard : 71]
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Posted On 08 September 2009 at 19:26
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Thanks for your response. Is this from the persepective of the person who is paying the interest or receiving the interest.
Why I am asking this :
When we say effective yield, its like I considering the exact inflow and outflow of cash because of the transaction and may also include any charges.
Eg: Loan interest agreed may be 12% per annum. If there is a fee component of say 1000/- for a loan of 100,000 for one year, effective yield for the lender is more than 12% considering the inflow of fee amount.
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Mohan Dagha
"IFRS CRAZY" Chartered Accountant
[ Scorecard : 756]
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Posted On 08 September 2009 at 19:30
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Revenue regonition is from point of view of person receiving the income...and revenue doent mean net revenue after deducting charges...it means gross inflow
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CA. Amit Daga
Finance Controller, CA. CS. CFA. CIFRS. M.COM.
[ Scorecard : 8421]
Forum Moderator
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Posted On 06 October 2009 at 15:14
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just one correction mohan.. Revenue and income is not same..
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