Accounting for a loan repayment holiday

In this Financial Instruments Q&A, Patricia Stebbens and Aaron Laurie answer the question of how to account for loan repayment holidays obtained during the COVID-19 pandemic.

There has been an increase in entities obtaining relief from their obligations under loan agreements. While the relief can take many different forms, here we illustrate how a borrower accounts for a deferral of loan repayments. Scenario Company B has a loan from a bank with the following key terms as at their 30 June 2021 reporting date: carrying amount immediately prior to the deferral is $1,000,000 3 years remaining on the loan monthly interest payments of $5,000 with $1,000,000 pri...

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Authors: Patricia Stebbens, Aaron Laurie

Published Date: 30 April 2021