Measuring and Reporting Values of Bank Loans

Document Type : Review Paper

Authors

1 CEO of QMB Bank

2 Assistant Prof. of Finance and Banking, Allameh Tabataba’i University, Faculty of Management and Accounting

Abstract

Banks and financial institutions have a crucial role in financing business entities to develop their investing and business activities. Hence, banks significantly contribute to the economic development of the countries. Moreover, loans are the most significant assets of a bank and measuring and disclosing loans values have become of considerable importance after the recent financial crisis. In this paper, different bases for measuring and reporting the values of bank loans including amortized historical cost less incurred loss and fair value are explained and recognizing loans impairment approaches of the International Accounting Standards Board, the Financial Accounting Standards Board of USA, the Basel Committee on Banking Supervision, and the Central Bank of Islamic Republic of Iran are presented. Recognizing loans impairment using a forward-looking approach of expected credit loss instead of using past-due information approach of incurred loss has led to movement towards measuring and reporting fair values of banks loans.

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Main Subjects

References

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Journal of Accounting and Social Interests
Volume 8, Issue 3 - Serial Number 30
December 2018
Pages 149-170

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History

  • Receive Date: 21 December 2016
  • Revise Date: 21 June 2017
  • Accept Date: 21 June 2017

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