Accounting for gold under IFRS
Aftab Khan
Someone has asked me this question and I thought I should post it
here. What is the treatment for accounting of gold under IFRS?
If a company owns gold (for whatever reason) - would this be
classified within cash? If not, then does it fall under IAS 39? What
category? And does it require fair valuation then?
Any tips, suggestions would be helpful. Please quote any specific
standards. It has been posted on http://www.ifrsissues.com/viewtopic.php?f=37&t=151
so please post your answers on the site as well if you can.
Thanks.
Aftab Khan
Administrator
www.ifrsissues.com
manda...@gmail.com
1.If the company holds gold as a trading item or as a item of
processing in manufacturing it can recognise and measure it under IAS
- 2 ; or
2.If the company ( like Bank,etc ) holds gold as a collateral for loan
or otherwise it can be treated as Available for sale financial asset
under IAS 39 ;
3. In India some banks do trade / buy or sale in bullion and show it
under Category "other Income "( Not revenue recognition ) for the
income and show as a current /Non current asset in B/S ( NRV)
This is open for debate and a clear guideline can be expected on this.
4. A forward contract on the price of gold that is settled in own
shares will be classified as a derivative asset or liability under IAS
32.
A correct disclosure as to the substance of the transaction / nature
of contract is highly recommended.
You can join my group on Linkedin : IFRS convergence : India
Regards
CA Mandar Godbole
BCOM,FCA,DISA,IFRS(ICAI)
You are welcome to join my group on Linkedin
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Vishwajit Honap
Dear All,
This question needs to be assessed from the point of view of facts of the case and substance of the transactions. It is not clear what is the Business and Objective of the Company and what is its Nature, also the nature & purpose of Holding GOLD is also not clear. Hence any answer or suggestion will not hold good till this additional information is known.
Thanking you all
CA Vishwajit Honap
On Sat, 06 Mar 2010 21:00:39 +0530 wrote
YOGI PATEL
IAS 32 defines financial assets as:
Any asset that is:
a) Cash;
b) An equity instrument of another entity;
c) A contractual right to receive cash or another financial asset from another entity, or to exchange financial assets or financial liabilities with another entity under conditions that are potentially favorable to the entity; or
d)A contract that may or will be settled in the entity’s own equity instrument and is not classified as an equity instrument of the entity
Examples of assets that meet the definition of a financial asset are:
Cash, above
Investment in shares or other equity instrument issued by other entities, see (b) above
Receivables, see (c) above
Loans to other entities
Investments in bonds and other debt instruments issued by other entities, see (c) above
Derivative financial assets, see above
Some derivatives on own equity, see above
Accordingly, gold is not a financial instrument. It is a commodity. It is outside the scope of IAS 32.
From: Aftab Khan <af...@ifrsissues.com>
To: IFRS-Pune <ifrs...@googlegroups.com>
Sent: Sat, 6 March, 2010 4:55:37 PM
Subject: Accounting for gold under IFRS
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