The Malaysian Institute of Accountants (MIA) has issued a new FRSIC CONSENSUS on 30 March 2011.
The release of FRSIC Consensus 15 – Classification Of A Term Loan That Contains A Repayment On Demand Clause By The Borrower 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..
You can download FRISC Consensus 15 here: http://www.mia.org.my/new/1_tech_detail.asp?tid=6&rid=5&id=919
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