Singapore Financial Reporting Standards

[Narcisse]

I believe that for Small Enterprises, financial statements must be kept according to Singapore Financial Reporting Standard for Small Entities, which is based on IFRS for SMEs. I guess I have a specific question and a more general question.

General
Is anyone aware of where I can find a copy of of the SFRS for SE? The closest thing I have found is this:

https://www.asc.gov.sg/pronouncements/s ... s/archives

But I don't think this is the standard in its entirety.

Specific
I am struggling a bit on how to treat an interest-free loan made from a director/shareholder to the company. I know that generally under IFRS when a company receives a loan from a director-shareholder the loan needs to be discounted using a market rate of interest from a similar debt instrument, but that in the UK, when a small company receives a loan from a director-shareholder or close family member, which is below market rate or at zero rates of interest, that loan need not be discounted using a market rate of interest for a similar debt instrument. In other words, the loan can be recognised in the accounting records at cost (transaction price).

I am trying to find out whether this applies for the SFRS for SEs as well, which is why I am looking for the full standards.

Thanks very much.

[Narcisse]

Ok ironically I think the answer just came to mind after my post, sometimes writing these things out to ask a question can actually frame it in one's own mind and help you find the answer yourself. I tried to delete the post but couldn't figure out how to, so I think I'll try and provide the answers here, as they may help someone else.

General

I believe using this link and selecting number 2, will give you the SFRS for SEs. They are so brief I guess, because for more information you need to refer to the full SFRS.

https://www.asc.gov.sg/pronouncements/s ... 1-jan-2017

Specific

If I look at this document, I see that:

12.11 The fair value of a financial liability that is due on demand is not less than the amount payable on demand, discounted from the first date that the amount could be required to be paid.

Hence, for a loan from a shareholder to a company that is due on demand, essentially the first date that the amount required to be paid is "now", discounting anything from now, is essentially just the face value of the loan, so the fair value of the loan is just the value of the loan, so pretty simple.

Thanks.

[Myasis Dragon]

We never charged interest on loans made by directors to the company. CPA never considered it. In fact, paying interest to the director complicated things since that's income to the director. It would be reportable income to a shareholder who was not an employee.

My understanding is that private exempt status permits small companies to do this.

[Narcisse]

Thanks. I funded the company to start it off as a Director/Shareholder with an interest-free, repayable on demand loan and have always been carrying that loan (from myself personally to the company) on the company books as a liability equal to the principal value of the loan (since there is no interest).

Got a little worried since lately I've been trying to educate myself better on Singapore FRS and everything I've been reading (that is probably made for bigger companies) has much more complex calculations for how to carry these loans on the books. However, with further research I discovered that in the UK under FRS small private companies can just carry these loans at principal value, and was trying to confirm that Singapore FRS allows Private Exempt Companies to do the same. Thanks.

I did also discover along the way, that since the loan is repayable on demand, it can't be valued at less than the present value of the cash flows from repayment, and since repayable on demand, it is discounted like the cash flow is now (not in the future), which is the principal value anyway.

So I'm fairly convinced we've been carrying it correctly on the books. Thanks for the help once again.