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Editorial Board on Accounts and Audit
  • Processing fees paid for availing Cash credit facilities

    by Iqbal on Sunday, March 03, 2019 at 10:19 PM

    Company has availed cash credit facilities from bank and paid one time processing fees. Such fees are considered as transaction cost. What is the treatment as per Ind As 109. Such credit is a demand loan no period is specified.

    Replied byEditorial Board Thursday, March 14, 2019 at 04:51 PM

    Effective interest rate applies to financial liability. The transaction cost has to be amortised over the term of the credit facility granted by bank. You may need to refer the agreement to check for the term which can be even a year (along with renewal every year)

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