To mark this momentous year for UK GAAP, I'm embarking on a mission to work my way through FRS 102, reading a portion on each working day of 2015 and writing a short blog entry on my thoughts and musings (be they few or many).
Let's keep going on section 11...
DAY 25 (12 Feb)
If you're losing the will to live, then we're nearly done on basic loans. 11.9(b) insists that the lender cannot be at contractual risk of losing its capital or return. However standard early redemption and extension clauses are permitted. The August 2014 version then contains several practical examples of loans which do or do not meet the basic definition. This list is perhaps not comprehensive, but goes a long way in helping us to deduce the right treatment for real-world loans.
Just in case we're still really unsure, paragraph 11.10 gives us another list of likely basic instruments, and para 11.11 gives us a likely list of loans that would be excluded. So you can't accuse the Accounting Council of not wanting to help us all, can you? I get the feeling that someone on the Council was a bit hurt that their precious standard had caused confusion and dismay, and thought 'Right then. I'll make sure to add so much guidance that no-one can quibble again!' But on a subject as potentially tricky as this, it's comforting to have such a belt-and-braces approach.
Tomorrow, it's onto recognition and measurement. Hurrah!
P.S. If you missed yesterday's instalment click here