International standards of financial reporting and devaluation of financial assets by case of communal enterprise “Luhansk regional fund for support of individual dwelling construction and the rural area”
International Standard of Financial Reporting (ISFR) 9 “Financial Instruments” was introduced in Ukraine on 01.01.2018. Bearing in mind that Ukrainian accountants and auditors are yet to learn the requirements of ISFR 9 on the assessment of losses from credit transactions, a practical example of assessing the losses from credit transactions is elaborated by scrutinizing these requirements. It is designed to help financial entities in implementing the new algorithm for devaluation of financial instruments, thus making the accounting of financial instruments more reliable and suitable for user needs. The following aspects are covered by the scrutiny and presented in image form: classification of financial assets by ISFR 9 “Financial Instruments”, summing up of the objective data giving evidence of financial assets devaluation; the method for accounting of investment; assessment of the expected devaluation of financial assets on the date of the recognition; the procedure for recording the reserve of doubtful debts according to by ISFR 9; calculation of the future and discounted value; financial instruments subject to devaluation by ISFR 9; financial instruments not subject to devaluation by ISFR 9. A practical example illustrates the algorithm for calculating devaluated assets, the extract from the enterprise report (report of “Luhansk Regional Fund for Support of Individual Dwelling Construction and the Rural Area”) on the total income, the extract from the enterprise report on the financial position as of the end of the year.
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