EIR can be calculated using spreadsheet function. coupon accrued to date): $900Ĭoupon: 5%, that is $50 (calculated on face value, fixed and paid annually on 31 December)īased on the data above, Entity A is able to prepare a schedule for cash flows and calculate the effective interest rate (‘EIR’) as presented below. All the relevant data for this example is presented below: Illustration of application of amortised cost and effective interest method is presented below:Įxample: Illustration of application of amortised cost and effective interest methodĮntity A purchases a bond on a stock exchange for $900. Gross carrying amount is the amortised cost of a financial asset before adjusting for any loss allowance.Įffective interest method is the method that is used in the calculation of the amortised cost of a financial asset/liability and in the allocation and recognition of the interest revenue or interest expense in P/L over the relevant period. Let’s start with the two essential definitions set out in Appendix A to IFRS 9:Įffective interest rate (‘EIR’) is the rate that exactly discounts estimated future cash flows through the expected life of the financial asset/liability to the gross carrying amount of a financial asset or to the amortised cost of a financial liability. subsequent recognition of interest income/expense using the effective interest method,.Please refer to terms and conditions for more details.Amortised cost is the amount at which some financial assets or liabilities are measured and consists of: However, in any event, the sum of Rebate Rate and Core Account Interest Rate shall not exceed 1.5%. You are only entitled to this Core Account Interest Rate after drawdown of WeLab Bank Personal Loan. (b) Rebate Rate shall be equal to 1.5% deducting the basic interest rate applicable to the Core Account of the Eligible Customer (“Core Account Interest Rate”). In which: (a) Applicable Deposit Balance of a calendar month shall be the monthly average of the day-end available balances of the Eligible Customer’s Core Account in HKD for each day in the respective calendar month (balances of any other currencies in the Eligible Customer’s Core Account are not included) capped at HKD 1,000,000. Within the Valid Period, Eligible Customer will receive a monthly cash rebate (“Interest Rebate”), amount of which shall be equal to: Applicable Deposit Balance of the respective preceding calendar month x Rebate Rate. ^The Promotion runs from 1 January to 31 March 2023. Please refer to terms and conditions for more details. The cash rebate amount will be credited into the Core Account on or before 31 August 2023. **From now on until 31 March 2022, successful WeLab Bank loan applicants with an approved loan of minimum of tenor of 24 months can enjoy up to HKD 13,888 cash rebate if the loan is drawn down within 7 days after approval. 10 successful referrals at maximum) over the Campaign Period under this Campaign. Each Eligible Customer can enjoy a maximum of HKD8,000 cash reward (i.e. *During the Campaign Period, Eligible Customer can enjoy HKD800 Referral Reward (“Referral Reward”) if you have successfully referred your Referee to apply for WeLab Bank Personal Instalment Loan and drawdown the loan within 7 days after approval.
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