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IND AS19
Financial Reporting
Why is the time value of money often not considered for short-term benefits, where a liability is created in the first year but payment is made in the following year, even though the present value of money could provide a more accurate representation of the liability and prevent potential inaccuracies in financial reporting??
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Best Answer
Generally in case of short term liabilities, the impact of discounting is not material. Also in most cases the interest expense would be charged off in same year itself. Since the computation are complex and require more time, it can be avoided. You will see similar exemption in leases as well.
CA Suraj Lakhotia Admin
Generally in case of short term liabilities, the impact of discounting is not material. Also in most cases the interest expense would be charged off in same year itself. Since the computation are complex and require more time, it can be avoided. You will see similar exemption in leases as well.
companies can choose to calculate the present value of the liability to reflect the time value of money and ensure accurate financial reporting ?
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