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A financial guarantee is a specific type of a financial liability defined in IFRS 9. It arises when an entity backs up a loan or debt taken by another entity and it often happens among the companies within one group.
27 mar 2023 · Under a financial guarantee contract, the issuer is required to reimburse a loss incurred by the holder. A common example of a financial guarantee contract is a parent company providing a guarantee over its subsidiary's borrowings.
15 lut 2018 · IFRS 9 Financial Instruments became effective on 1 January 2018. In this article, we take a look at how the accounting for certain issued financial guarantee contracts (FGCs) will be affected.
In this article we look at financial guarantees, which under IFRS 9 are accounted for as financial liabilities, as they were under IAS 39 Financial Instruments:
1 lip 2021 · A financial guarantee is an agreement that guarantees a debt will be repaid to a lender by another party if the borrower defaults. Essentially, a third party acting as a...
23 maj 2024 · Understanding how guarantees are accounted for is vital for accurate financial reporting. Proper recognition, measurement, and disclosure of guarantees ensure transparency and reliability in financial statements, which is critical for stakeholders making informed decisions.
Challenges and Considerations. Determining Fair Value: Estimating the fair value of a financial guarantee liability can be complex, as it requires assessing the probability of default and potential loss, which may involve significant judgment and the use of valuation techniques.
