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We have given a loan to a related party company which is not performing well. This company should pay us interest for the loan annually. However due to its loss making condition it is not sure that we receive this interest income. Can interest income be recognized as & when received?
in IAS 18 - Revenue by
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Interest income should be recognized using the effective interest method as set out in IAS 39.You will have to recognize a deferred interest income at the market rate.