Not defined, and the circulation period is one year - 365 days. Calculate the discount for each reporting date. To do this, you need to subtract the purchase price from the nominal value: 1,000,000 rubles. – 900,000 rub. = 100,000 rub. Then subtract the release date from the purchase date: February 16 - February 12.
Next, subtract the resulting number of days from 365 days: 365 days – 5 days. Then divide the first result obtained by the number of days you calculated: 100,000/360 = 277.8. Multiply the result by the number of days: 277.8 * 74 = 20555. This takes into account the number of days that have passed since the purchase of the bill before the reporting date or between reporting dates. In other words, this is the specific number of days during which you own the bill.
Income on the bill is reflected evenly throughout the entire period the bill is held by the bill holder.
The organization is obliged to recognize income on the bill of exchange during the period that the bill of exchange is on the balance sheet.
A bill of exchange due at sight must be paid upon presentation.
For profit tax purposes, any income, including in the form of a discount, which is received on a debt obligation of any type is recognized as interest. To calculate the interest rate for compounding interest, subtract its purchase price from the face value of the purchased bill. Divide the result by the purchase price of the discount bill. Divide the total number of days in a year (365) by the number of days from purchase to maturity of the bill. Multiply the first result obtained by the second. This way you will get an interest rate calculation for compounding interest.
Discounting is a method of determining the future value of cash flows, i.e. bringing the volume of future income to the present time. In order to correctly assess their value, it is necessary to know the forecast values of revenue, expenses, investments, capital structure and interest rate discounting, i.e. rate of return on invested capital.
Instructions
Most often, the discount rate is defined as the weighted average cost of capital. When using this method you will get the most objective result. To calculate the discount rate, use the following formula: WACC = Re(E/V) + Rd(D/V)(1-Tc), where Re is the rate of return on equity (cost of equity), %; E is the market value of equity; D – market value of borrowed capital; V – total cost of borrowed capital and company shares (equity capital); Rd – rate of return on borrowed capital (cost of borrowed capital); Tc – income tax rate.
You can calculate the discount rate for equity capital as follows: Re = Rf + b(Rm-Rf), where Rf is the nominal risk-free rate of return; Rm is the average rate of return on the stock market; (Rm-Rf) is the market risk premium; b – a coefficient showing the change in a firm's share price compared to changes in share prices in a given market segment. In countries with a developed stock market, this coefficient is calculated by specialized analytical agencies.
However, please note that this approach does not allow calculating the discount rate for all enterprises. It does not apply to companies that are not public limited companies, i.e. do not trade shares on the market. In addition, it cannot be used by firms that do not have data to calculate their b-factor. In these cases, businesses should use a different method for calculating the discount rate.
The cumulative method of estimating the risk premium is based on two assumptions. First, if investments were risk-free, then investors would demand a risk-free return on their capital. Secondly, the higher the owner of capital assesses the risk of the project, the higher the requirements for profitability. Based on this, the discount rate is determined as follows: R = Rf + R1 +..+Rn, where Rf is the nominal risk-free rate of return; R1..Rn is the risk premium for various factors. The presence of each factor and their value is determined by expert means. This method is more subjective in nature, since the amount of the risk premium depends on the personal opinion of the expert.
One of the pressing problems when working on a business plan is determining the discount rate. Meanwhile, the discount rate reflects the cost of money, taking into account temporary factors and all kinds of risks, and is necessary for investors to assess the prospects of the project.
Instructions
Calculate the discount rate using the following formula:
PV=FV*1/(1+i)×n, where PV is the currently available value of costs or benefits, FV is the future value of costs or benefits, i is the discount rate, n is the project duration (number of years).
Along with the problem of costs or benefits (in constant or current terms), you may also have problems with the choice of bet. There are two main types of rates commonly used: private (current or inflation-admitting or non-inflationary) or public (opportunity cost in the public sector). To determine the public rate, use the following formula:
SRRI = r + uc, where r is the norm of intertemporal preferences, u is the mobility of marginal income, c is the growth rate of consumption per capita.
When making investment calculations, determine the discount rate as the weighted average cost of capital (WACC). This takes into account both the cost of equity (shareholder) capital and the cost of invested funds. In turn, the cost of equity can be determined using the long-term asset pricing model (CAPM). Build the appropriate graph and calculate the bet.
Use the most common method of determining the discount rate in practice - the cumulative method of estimating the risk premium. You will need the following formula:
R = Rf + R1 + ... + Rn, where R is the discount rate, Rf is the risk-free rate of return, R1 + ... + Rn is risk premiums.
Use the real options method to take into account risk factors such as market loss, the possibility of stopping the project, or a change in technology. However, this method (as well as calculations using the dividend growth model or the theory of arbitrage pricing) is usually applied with many amendments, which excludes the possibility of its regular use for assessing the real prospects of a business.
Video on the topic
Using discounted cash flow analysis, financial analysts evaluate companies in terms of their attractiveness for investment. This allows you to get answers to very specific questions, for example, determine the amount of investment in the project.
How is cash flow discounting used?
Discounting cash flows is a valuation technique that allows us to determine the size of future benefits. Using this method, the true value of the company is determined, without regard to the prices and profits of competitive firms. Venture capitalists order discounted cash flow analysis to determine future returns on investments.
Discounting is often used for real estate analysis. Not only cash flows are taken into account, but also other benefits: unrealized loss, tax credits, net proceeds. The purpose of discounting is to evaluate possible economic benefits and calculate the amount of financial investment in the company.
Steps to apply cash flow discounting
Discounting occurs in six stages. The first step is to prepare accurate forecasts about the organization's possible future operations. The more accurate they are, the greater the confidence of investors. Next, positive and negative cash flows are assessed for each year of the forecast, and the annual increase in financial resources in the future is calculated. The final value of the company for the last year of forecasts is calculated. The discount factor is determined. This indicator is one of the key elements of cash flow analysis. It reflects the existing risks.
The discount factor is applied to the shortfall and surplus of funds in each year of the forecast and to the final cost of the project. The result is a value that determines the size of the contribution for each year. If you add these values, you get the current value of the company. The analysis is completed by subtracting existing borrowings from the present value of future cash flows. In this way, an estimate of the current cost of the project is calculated.
Despite the technical complexity of the calculation, discounted cash flows rely on the simple idea that present cash is more valuable than future cash. That is, the return on financial investments will exceed the current value. There is no point in investing in a project only to receive the same amount in the future. A much more attractive idea is to invest one hundred today in order to receive one hundred and twenty tomorrow.
Like all other valuation methods, discounting has disadvantages. The main one is that by focusing only on future cash flows, it ignores external factors - the ratio of earnings to share price, etc. In addition, since the method involves accurate forecasting, one must have a very good knowledge of the history, market and nature of the business being valued.
DETERMINATION OF EXCHANGE VALUE AND
BILL YIELD
1. Discount bill
1. 1. Definition of discount and discount rate
Discount bills are quoted based on the discount rate. It talks about the amount of discount that the seller provides to the buyer. The discount rate is indicated as a percentage of the face value of the bill as a simple percentage per year. The discount rate can be converted into ruble equivalent using the formula:
Where: D- bill discount; N- denomination of the bill; d- discount rate; t- the number of days from the date of purchase of the bill until its repayment. The denominator is 360 days, since settlements with the bill are carried out on the basis of a fiscal year equal to 360 days.
Example 1.
N= 100 million rubles, d- 20%, t = 45 days. Determine the amount of the discount.
Solution.
It is equal to:
=250
thousand roubles.
The discount rate is determined by the formula:
(2)
Example 2.
N=10 million rubles, D= 100 thousand rubles, 50 days remain until repayment. Determine the discount rate.
Solution.
It is equal to:
=0.072 or 7.2%
1. 2. Determination of the bill price
The price of the bill can be determined by subtracting the discount amount from the face value, namely:
P= N− D(3)
Where: R - bill price.
If the discount rate is known, then the price is determined by the formula:
(4)
Example 3.
N= 10 million rubles, d= 6%, 15 days left until maturity. Determine the price of the bill.
Solution.
It is equal to:
9975thousand roubles.
If the investor has determined for himself the value of the return that he would like to provide on the bill, then the price of the paper can be calculated using the formula:
(5)
Where: r- the return that an investor wants to achieve. (If an investor compares investments in a bill with other securities for which the financial year is 365 days, then in formula (5) it is advisable to put the number 365 in the denominator).
5. 3. 1. 3. Equivalent discount rate, bill yield
The discount rate is a characteristic of the profitability of the bill. However, it does not allow one to directly compare the yield of a bill with the yield of other securities, since, firstly, it is calculated on a 360-day basis, and, secondly, when determining it, the discount refers to the face value, whereas in reality the buyer invests a smaller amount, namely, the price.
These circumstances underestimate the profitability of the bill. Therefore, it is necessary to determine a formula to convert the discount rate into a yield based on 365 days and take into account the price. It can be found from the following equality:
(6)
where: r is the equivalent rate of return.
(7)
Example 4.
The discount rate is 20%, the repayment period occurs in 30 days. Determine the equivalent rate.
Solution.
It is equal to:
= 0.2062 or 20.62%
The equivalent rate can also be determined from formula (5), if we take a financial year equal to 365 days:
(8)
2. Interest bill
2.1. Determination of the amount of accrued interest
and bill amount
Interest-bearing bills bear interest at the rate specified on the bill. The amount of accrued interest can be determined by the formula:
(9)
Where: I- amount of accrued interest; N- denomination of the bill; WITH %
- interest rate accrued on the bill; 
- the number of days from the beginning of interest accrual until its repayment.
Example 5.
The face value of the bill is 1 million rubles, 25% per annum is accrued on the bill, 30 days have passed from the beginning of interest accrual until the bill is presented for payment. Determine the amount of accrued interest.
Solution.
It is equal to:
=20833,33
rub.
The total amount that the holder of an interest-bearing note will receive upon its repayment is equal to the sum of the accrued interest and the face value. It can be determined by the formula:
(10)
where: S is the sum of interest and face value of the bill.
2.2. Determining the price of a bill
The price of the bill is determined by the formula:
(11)
Where: R- price of the bill; t- the number of days from purchase to maturity of the bill; r is the return that the investor would like to provide for himself.
2. 3. Determination of the profitability of the bill
The yield of the bill is determined by the formula:
(12)
Example 6.
The face value of the bill is 1 million rubles, the bill accrues 25% per annum, the period from the start of interest accrual to the redemption of the paper is 60 days. Determine the profitability of the operation for the investor if he buys a bill 30 days before maturity at a price of 1010 thousand rubles. and present it after this period.
Solution.
The yield is equal to:
We have presented formulas for determining the price and profitability of bills without taking into account taxation. The formulas for tax rates should be adjusted as follows: it is necessary to multiply the amounts subject to taxation by (1 - Tax), Where Tax- tax rate (the tax rate is inserted into the formula in decimal value, for example, a tax of 15% should be taken into account in the formula as 0.15); For example, for an interest-bearing note, taxes are levied on the amount of accrued interest. Therefore, the value is subject to adjustment:
namely:
Tasks
1. Determine the discount amount, if the discount rate is 10%, there are 100 days left until the bill matures, the par value is 1 million rubles
2. What is the price of a bill of exchange if its face value is 100 thousand rubles, the discount rate is 15%, and the maturity date is 30 days.
3. The investor would like to receive a yield of 30% per annum on a discount bill. The bill has 50 days until maturity, par value 100 thousand rubles. At what price should the bill of exchange be purchased?
4. The discount rate is 30%, there are 100 days until the bill is repaid. Determine the equivalent rate.
5. The face value of an interest-bearing bill is 100 thousand rubles, 10% per annum is charged on the bill, the period from the start of interest accrual to the redemption of the paper is 30 days. Determine the profitability of the operation for the investor if he buys a bill 10 days before maturity at a price of 100,200 rubles.
5. The face value of an interest-bearing bill is 100 thousand rubles, 10% per annum is charged on the bill, the period from the start of interest accrual to the redemption of the paper is 30 days. Determine at what price the investor should buy it 20 days before maturity in order to ensure a return on the operation of 25% per annum.
We bought bills at sight no earlier than 09/10/17. at a price of 3,000 rubles. Their denomination is 5000 rubles. Nothing is said about percentages. How to take into account the discount on a bill in accounting. and tax.accounts? We can resell this bill ahead of schedule.
The rate at which interest is calculated is indicated on the bill itself. If there is no interest rate in the bill, it is considered non-interest bearing.
The procedure for reflecting the discount on a bill of exchange received in accounting and taxation, as well as its calculation, can be found in the recommendation given in the justification of the answer.
Oleg the Good,
How to reflect interest (discount) on a bill received in accounting and taxation
Accounting
Calculate the amount of interest or discount on a bill of exchange using an accounting certificate * (Part 1, Article 9 of Law No. 402-FZ of December 6, 2011, Clause 4, Article 328 of the Tax Code of the Russian Federation).
Accounting: discount bill
Reflect the discount on a bill in accounting depending on the bill for which it is provided:
– on a bill of exchange, which is accounted for as a financial investment (in particular, a bill of exchange of a third party);*
– on a bill of exchange, which is taken into account as a guarantee of payment of debt by the counterparty (in particular, the counterparty’s own bill of exchange, which the organization received to secure goods (works, services)).
To account for financial investments in the form of discount bills, an organization has the right to use the following options:*
– accounting of bills at acquisition cost (initial cost) with adjustment for discount. In this case, the discount amount is applied evenly to the financial result of the organization’s activities;
– accounting of bills at the cost of acquisition (initial cost) without taking into account the discount.
Fix the selected option in the accounting policy for accounting purposes.
An example of reflecting in accounting a discount on a third party’s bill of exchange received in payment for services rendered. The accounting policy of the organization for accounting purposes provides for the uniform attribution of the discount to financial results during the circulation period of the bill*
On February 24, Alpha LLC received an interest-free promissory note from a third party with a face value of 100,000 rubles in payment for the consulting services previously provided by Manufacturing Company Master LLC.
The cost of services provided, paid by bill of exchange, is 59,000 rubles. (including VAT – 9000 rubles). The payment deadline for the bill is August 2.
Debit 58-2 Credit 62
– 59,000 rub. – a third party’s bill of exchange was received as payment for services rendered.
The accounting policy for accounting purposes provides for uniform accounting of the discount on the bill. The Alpha accountant determined the discount amount for February as follows:
(RUB 100,000 – RUB 59,000): 159 days. x 4 days = 1031 rub.
At the end of February, the following entry was made in accounting:
Debit 58-2 Credit 91-1
– 1031 rub. – an adjustment to the book value of the bill by the discount amount for February is reflected.
When accounting for bills of exchange without uniform distribution of the discount amount (second option), the bill of exchange is reflected at its original cost for the entire time that it is owned by the organization. At the same time, the discount does not in any way affect the value of the asset and the financial results of the organization.
With this accounting option, the discount on the bill must be taken into account when the bill is disposed of, in particular, at the time of its redemption as a financial result from the transaction.*
If an organization calculates income tax using the accrual method, take into account the amount of interest (discount) on a bill of exchange in income every month in the amount attributable to it* (clause 6 of Article 271 of the Tax Code of the Russian Federation).
When repaying a bill of exchange, do not include the interest (discount) received from the debtor, on which the organization previously paid income tax, into income if their amounts have already been taken into account for taxation* (clause 3 of Article 248 and the Tax Code of the Russian Federation).
If an organization reflects a bill of exchange in accounting as a financial investment at its original cost without adjusting for the discount amount, in accordance with PBU 18/02, a deductible temporary difference arises and a corresponding deferred tax asset arises. It will be repaid upon receipt of payment for the bill. This follows from the paragraphs and PBU 18/02.
Oleg the Good, Head of the Corporate Income Tax Department of the Department of Tax and Customs Policy of the Ministry of Finance of Russia
Interest calculation
The calculation of interest on a bill received depends on the following indicators:
- the amount on which interest is calculated;
- interest rate on a bill;
- the duration of the period for which the calculation is made (for example, a month).
To determine the amount of interest on a bill for a month, use the formula:
The rate at which interest is calculated is indicated on the bill itself. If there is no interest rate in the bill, it is considered interest-free.*
This order follows from the articles and Regulations approved
Discount calculation
The calculation of the discount on the bill received depends on the following factors:*
- the total amount of the discount (the difference between the nominal and original value of the bill);
- the number of calendar days remaining until the expiration date of the bill of exchange (i.e., until the last day when it can be presented for payment);
- the duration of the month for which the calculation is made.
To determine the discount amount on a bill for a month, use the formula:*
| Discount amount per month | = | Face value of the bill | – | Initial cost of the bill (purchase price) | : | Number of calendar days remaining until the expiration date of the bill of exchange | X | The number of calendar days of the month during which the bill was in the ownership of the organization |
This calculation procedure follows from paragraph 22 of PBU 19/02, paragraphs and PBU 9/99, paragraph 3 of Article 43 and paragraph 4 of Article 328 of the Tax Code of the Russian Federation.
The procedure for determining the number of calendar days remaining until the end of the circulation period does not depend on whose bill of exchange was received: a third party or the counterparty’s own bill.
Determine the number of calendar days remaining until the expiration date of the bill of exchange, starting from the day following the day of receipt of the bill of exchange until the day when its circulation period ends.
As a rule, the end of the circulation period (the last day on which the bill can be presented for payment, or any indication of this date) is indicated on the bill itself* (Article and Regulations approved by the resolution of the Central Executive Committee of the USSR and the Council of People's Commissars of the USSR dated August 7, 1937 No. 104/1341). For example, this could be the inscription “The bill is payable on the following date: December 24, 2010.”
To correctly determine the number of calendar days in a month during which the bill was in the ownership of the organization, you need to know:*
- the date from which you need to start distributing the discount;
- the date on which accruals must be stopped.
Start calculating the monthly discount on a bill of exchange from the day following the day when the bill of exchange was received into ownership (for the month in which the bill of exchange was received), or the day of the beginning of the month (if the bill of exchange was received last month).
Consider the last day of discount distribution to be:
- the last day of the month in accounting or tax accounting (if on this date the bill is the property of the organization);
- the day of disposal of the bill of exchange from the organization’s property (for example, upon sale or transfer to a counterparty for debt);
- the day on which the bill must be presented for redemption (the end of the bill's circulation period).
An example of calculating the discount on a third party bill for a month*
On January 12, 2010, Alfa CJSC (seller) entered into an agreement for the supply of a consignment of goods with Hermes Trading Company LLC (buyer) for a total amount of 118,000 rubles. (including VAT – 18,000 rubles). The contract provides for the buyer to pay an advance in the amount of RUB 23,600. (including VAT - 3600 rubles). On the same day, Hermes handed over to Alfa a bill of exchange from a third party (Sberbank of Russia) with a face value of 40,000 rubles as an advance payment. The payment deadline for the bill is March 31, 2010. On this day, Alpha presented the bill for redemption.
– for January:
(40,000 rub. – 23,600 rub.) : 78 days. x 19 days = 3995 rub.;
- for February:
(40,000 rub. – 23,600 rub.) : 78 days. x 28 days = 5887 rub.;
- for March:
(40,000 rub. – 23,600 rub.) : 78 days. x 31 days = 6518 rub.
An example of calculating the discount on a counterparty's own bill of exchange for a month
On January 12, 2010, Alfa CJSC (seller) entered into an agreement for the supply of a consignment of goods with Hermes Trading Company LLC (buyer) for a total amount of 118,000 rubles. (including VAT – 18,000 rubles).
On the same day, Hermes, to ensure payment for the goods, handed over to Alpha its own promissory note with a nominal value of 140,000 rubles, issued on January 11, 2010. The payment deadline for the bill is March 31, 2010. On this day, Alpha presented the bill for redemption.
Alpha's accountant calculated the discount amount for each reporting period (month) during the entire time the bill was in the organization's ownership (from January 13 to March 31, 2010). The number of calendar days remaining until the expiration date of the bill of exchange is 78 days (19 days + 28 days + 31 days).
The discount amount on the third party bill received was:
– for January:
(RUB 140,000 – RUB 118,000) : 78 days. x 19 days = 5359 rub.;
- for February:
(RUB 140,000 – RUB 118,000) : 78 days. x 28 days = 7897 rub.;
- for March:
(RUB 140,000 – RUB 118,000) : 78 days. x 31 days = 8744 rub.
Return back to
A bill discount is the purchase of a bill before its expiration at a price below par, and in banking practice it is the discount interest charged by banks when purchasing (discounting) bills.
If a bank or other organization issues its own discount bill, then, as a rule, it is assumed that this bill is higher than its selling price, since the holder of the discount bill receives income from the discount.
Discount is the difference between the purchase price of a bill of exchange and its nominal price (bill amount specified in the text of the bill of exchange).
How is the discount on bills of exchange calculated for the purpose of determining the profitability of a bill and for purposes?
When calculating the discount, the drawer issuing his own bill takes into account:
The period before which the bill cannot be presented for payment (i.e., during which period the drawer can use the funds raised from the issue of the bill);
cost of resources (% rate) at which the drawer attracts (could attract) a similar amount for a similar period.
If the agreement between the drawer of the bill issuing its own bill and the future bill holder establishes the selling price of the bill, then to calculate the discount it is necessary to determine the nominal (bill) value of the bill.
This can be done using the formula:
Bill amount (face value) = Bill selling price x (1 + Bill term x % rate: 365(366)
Wherein:
The term of the bill of exchange is the number of calendar days from the date following the date of issuance of the bill of exchange to the maturity date of the bill of exchange indicated in the text of the bill of exchange.
It should be taken into account that, as a rule, it is not advisable to issue promissory notes at sight at a discount. After all, such a bill can be presented for payment within a year from the date of issue on any day and it is not possible to determine its period for calculating a reasonable discount amount and, accordingly, the profitability of such a bill.
The situation with bills of exchange due “at sight, but not earlier than a certain date” is approximately similar, but it is still possible to calculate the discount on such a bill based on the period from the date following the date of issue of the bill to this specific date. The procedure for issuing such bills and calculating the discount on them is best determined by accounting policy.
% rate – the rate of attracting resources for a period similar to the term of the bill. The calculation usually uses the interest rate at which the drawer could attract funds for the specified period. The benchmark may be rates on interbank loans, average rates on loans or deposits, refinancing rates, etc. The procedure for establishing such rates is determined by the drawer in the accounting policy. Banks, as a rule, prescribe the procedure for setting interest rates on attracted and allocated resources in accordance with the terms in the Deposit Policy.
Usually, when repaying a bill, the drawer pays an amount greater than the amount of money received under this bill or the cost of goods, works or services purchased for it. In essence, this is the payment by the bill debtor for the use of money during the circulation of the bill. And often it is expressed in the form of a discount - the difference between the face value of the bill and the funds raised against the bill. Tax accounting for such a discount is not easy. Therefore, let's look at it together using the example of a simple bill of exchange, which had only one holder.
Discount = income/expense on debt obligations
In tax accounting, the discount on a bill of exchange is taken into account in the same manner as income/expenses on any other debt obligation. As you remember, special rules have been established for their recognition:- income or expense must be taken into account based on the established profitability and duration of the debt obligation;
- for debt obligations whose validity period spans more than one reporting period, income or expense must be reflected at the end of each month. When a debt obligation is repaid before the end of the reporting period, income or expense must be recognized on the date of repayment.
