Repurchase Agreements In Ifrs

In the borrower`s books, the bonds are recorded as assets and the money received by the lender is recorded under the liability as a „pension contract loan.” When the repurchase transaction is a financing agreement, the entity continues to record the assets as well as a financial liability for each consideration received by the client. The entity accounts for the difference between the amount of consideration received by the client and the amount of the interest-benefit consideration and, if applicable, as processing or detention costs (e.g. B insurance). In the first contract with Customer 1, a machine is sold for 3,500,000, with the right or obligation to repurchase the asset for 2,900,000, the maximum duration for the exercise of the buyback option is one year from January 2018. The obligation for a company to repurchase the asset (a futures contract – see 3.7.2); Under paragraph 66, the client does not control the assets in repurchase transactions and the entity must therefore continue to account for the assets in its financial statements, although the asset is used by a third party because the client has limited the ability to use the asset because it is a pension contract. As part of its evolving interpretation of the service concession agreements, IFRIC has tentatively concluded that a transaction in the form of a sale and repurchase of leasing should not be counted as such if it includes a pension contract. The reason is that the seller/lessor has retained control of the assets under the pension contract. Therefore, the criteria for recognition of a sale in paragraph 14 of IAS 18 Revenue would not be met. In the second contract of the example, we find that the feed-in price is higher than the original selling price, which is why the company must recognize a financing agreement, as we have already seen in the table of reasons. Going back to the examples above, we find in the first contract that the purchase price is lower than the original selling price. On the basis of IFRS 15, the repurchase transaction should be treated as a financing agreement that does not generate revenue. As a general rule, a pension contract is a contract by which an entity sells and promises an asset or has the possibility (either in the same contract or in another contract) to buy back the asset. Finally, the repurchase price in the contract with the last customer is less than the original selling price and the market price is higher than the original selling price, so that this type of transaction must be recognized as a preferential sale.