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Accounting treatment for letter of credit under IFRS?


What is the accounting treatment for letter of credit under IFRS? Do we need to record it as a liability in the balance sheet? or it is a contingent liability?

asked May 16, 2015 in IAS 39 - Financial Instruments: Recognition and Measurement by anonymous

1 Answer

0 votes

Accounting treatment of Letter of Credit depends on its use.

LOC is open in a bank on behalf of the buyer to make payments to the seller.Unless letter of credit is actually used it is off-balance sheet disclosure. Letter of credit is a future liability, so it is contingent on the occurrence of an event.

answered Oct 29, 2016 by ammar0930 Level 2 Member (3,800 points)


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