An entity subsequently measures a statutory receivable using the cost method. This method involves adjusting the transaction amount for (a) accrued interest and other charges, for example penalties on late payments, and (b) impairment. The transaction amount is the initial amount at which a statutory receivable is recognised with reference to the amount specified in, or calculated, levied or charged in accordance with legislation or similar means.
Interest and other charges accrued
Interest and other charges, for example fines and penalties, are levied on overdue or unpaid statutory receivables in terms of legislation or similar means. The interest rate and the basis used for levying the interest is often specified in legislation or similar means. The interest and other charges are recognised and measured in accordance with the amounts specified in legislation or similar means.
Any interest and other charges follow the initial classification of the statutory receivable based on the nature of the transaction.
Impairment
GRAP 108 requires an entity to assess at each reporting date if there is an indication that a receivable or group of receivables is impaired. If there is an indication that a statutory receivable or group of statutory receivables is impaired, the impairment loss is measured as the difference between the estimated future cash flows and the carrying amount of the receivable. |
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