CERTYNEX IFRS ACADEMY

Peltis grants an 18-month loan to its joint venture and presents the payment as a financing activity, on the ground that it is a “financing transaction”. What is the error?

A loan of more than 12 months to a joint venture must be presented as operating activities.

The loan is a cash equivalent that generates no cash flow.

There is no error; Peltis may choose freely.

A loan made is an investment of the entity: it is investing.