Security deposit setoff

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3 Points Posted on 12 May 2020
Security deposit can set-off against monthly rent ???

if yes, any consequences for that ?
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On 12 May 2020 at 12:09 Report
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This discussion explores whether a security deposit can be used to offset monthly rent payments. According to IFRS guidelines since 2014, offsetting is permitted if an event is settled in the current period and the entity has a legal right to do so. While there are generally no negative consequences if these conditions are met, disclosures regarding pledged financial assets are required in the Statement of Financial Position (SOFP). Further disclosures may be necessary if the counterparty defaults due to bankruptcy.

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My grammar is 💯 good I
7306 Points Posted on 13 May 2020

Since 2014, IFRS permits offsetting when an event is settled in the current period rather based on contingency of future events. For this, an entity must obtain a legal right and after which there will be no consequences because information about financial assets pledged as collateral will be disclosed in SOFP. Then, when the counter party will default the payment to you due to bankruptcy, you will have to make another disclosure about the event. The cost constraint to preparers of financial statements is additional to provide this information.  

https://www.ey.com/Publication/vwLUAssets/Applying_FI_May2012/$FILE/Applying_FID&P_May2012.pdf

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On 13 May 2020 at 09:24
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3 Points Posted on 13 May 2020
Thank you for the response.
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On 13 May 2020 at 10:12

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