Demand feature

Learning objectives

• Calculate the higher of the measured value and the amount payable on demand, discounted from the first date on which the amount could be required to be paid.L3

Normative references

• IFRS 13 §47The fair value of a financial liability with a demand feature is not less than the amount payable on demand, discounted from the first date that the amount could be required to be paid.

Original summaries of the paragraphs (reference register), never a quotation of the standard.

3 questions

• Torvane's demand deposit must be repaid at the earliest in {years} years for {demand_amount} (first possible demand date); discount rate {rate}% (case data). A valuation technique gives {technique_result}. Compute the discounted demand amount and then the fair value of the financial liability.L3
• Mirelane received funds from its customers: the sum of {demand_amount} can be claimed at the earliest in {years} years (first possible demand date). At the discount rate of {rate}% (case data), a valuation technique for this financial liability gives {technique_result}. Determine the discounted demand amount, then the fair value of the liability.L3
• A demand deposit of 500 is repayable immediately. A valuation technique gives 470, and the accountant uses 470 as fair value on the grounds that "the deposit earns less than the market rate". What is the error?L3