| 30 Mar 2011 | Circular MF12/2011 |
ALL MEMBER FIRMS
MIA ISSUES FRSIC CONSENSUS 15 ''CLASSIFICATION OF A TERM LOAN THAT CONTAINS A REPAYMENT ON DEMAND CLAUSE BY THE BORROWER''
The Institute is pleased to inform members that the Council has approved the release of FRSIC Consensus 15 ''Classification of a Term Loan that Contains a Repayment on Demand Clause by the Borrower''.
FRSIC Consensus 15 is issued as part of the Institute’s initiatives to promote best practices in compliance with the highest standards in financial accounting. FRSIC completed the development of the Consensus after considering the responses to the exposure draft, published in January 2011.
About the Consensus
FRSIC Consensus 15 provides guidance to address the current and non-current classification issues faced by a borrower related to a term loan agreement which contains a repayment on demand clause. Considering the legal opinions obtained as well as the case laws established in Malaysia, FRSIC concluded that the repayment on demand clause in term loan agreements governed by and construed in accordance with the laws of Malaysia would not affect the borrower’s ability to defer settlement of a liability for at least twelve months after the reporting period. As such, the borrower should determine the classification of the liability associated with such term loan in its statement of financial position in accordance with other terms and conditions as stated in the term loan agreement.
Please be guided accordingly.
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