Wah....this thread move so fast...

go back to cherroy " Fair value accounting rules only applied when the bank is holding the asset.
A property collateral loan, the value is based on loan, not property in the bank book.
Banks do not own the property at this stage."

So no one spot the mistake?

I give u a hint. Receivable is an asset too. Asset need not must be property. In  banking " an receivable is a tradeable" product. Hehehehe.... so many so so accountant here? How u pass your advance financial reporting paper?

your basic of impairment is correct n no urgument on that.
I said when bank a sell the underwater to bank b.

bank a will sell at less amount and there is this provision come in.

So this is the fair value adj.

No npl. But bank still need apply fair value rules.can you help me wat is this?  I cant find  my report

"Even when another bank (bank b) wants to take over the loan assets, how much will bank b pay bank A? They don't benchmark it against the property value, they benchmark against the cash flows from customer. They will probably price in some discounts due to risks etc (if there's limited or no risk or special case) that's all. They will not use the property price as a benchmark. It's because they are buying over the rights to receive the cash flow. They r not buying over the rights to own the property. "

Hikari, I hope u wont give up ! 

Bank B wan to takeover Bank A's receivable asset is Bank B matters, Bank B just takeover the collateral.

Is the same. Bank B just wish borrower pay on time, as they wan to earn interest and recover from the principle.

why Bank B take over Bank A's asset and trigger the margin call ? this will force low cash but prompt payment investor to die, lose lose situation...summore Bank B takeover Bank A asset to put themself in this kind of situation...it doesnt make sense...

""Even when another bank (bank b) wants to take over the loan assets, how much will bank b pay bank A? They don't benchmark it against the property value, they benchmark against the cash flows from customer."

I am an accountant and was an auditor.

You are again saying that bank A should provide based on what bank B is willing to pay. If bank A customers are paying on time and no npl based your scenario,  why do I want to sell to bank B at 5% discount when I can just continue to hold it and wait for my customers to pay me and give me a steady stream of income as per my normal course of business.

So what if bank c only willing to buy your loan assets with 10% discount? Bank d with 20% discount. Which value do u use then?

When u r the accountant for bank A how r u going to determine how much provision to make? Call up your competitor n provide all contracts for them to give u a quote so that they can help you prepare your balance sheet? No ma.. right?

I think key point is that provision is made when customers default (npl or bad payment record etc). It is not automatically made just because the bubble burst.

Fyi, prudent concept doesn't apply anymore as it seems you keep going on a worse case scenario (npl happens, I have to seel off my loans etc) even when customers r not defaulting.

from the myvi example obviously show u are not accountant, bcos u never discuss on the principle summore u dont understand the accounting pricinple explain by Hikari.

I really salute Hikari, please dont give up...im learning 

Well, Im afraid it's not just me and that none of us here get your point or understand what you are trying to explain.

Obviously during property booming your bank selling price and during property bubble is different. So many factors comes into picture.  Interest rate risk, growing household debt leading to higher risk of npl, lesser room for growth for the bank etc will price your bank differently.

We were talking about property price drop affecting loan receivables. And now it becomes selling off banks. I guess we r drifting further away from the initial discussion. But nonetheless, I would really want to know how any of these affect the borrowers/property investors as ultimately that's what all of us are interested in. Not how a bank accounts for things n write off things.  Probably should do it in the other section on stocks to value public bank, maybank or cimb shares value. LOL

So I guess bill gates and warren buffet should sell all their shares to lock in gains. Otherwise, they are worth nothing. Who knows tomorrow their companies might be worthless. unless they sell now, they are worthless. With such mentality, no wonder you never hold any properties. 

.......
And dont assume people are not looking for properties because paper gain is not a gain. People have different strategies of investing. But by buying a house for own stay, you risking yourself from future opportunities if you are too attached to your prop (i.e. heavily invested on renovation).

I am sure that there people or investor that buy investment properties but also make it for own stay and ready to cash out on good deal.

Whether an asset is cash flow positive or negative depends on your leverage. Nothing to do with "marked to market" values, if you understand what I mean.

That is y I said that homeowner never drive the prop price! Investors, flippers, developers, agents call the shot in the market. New homeowners are the preys for the hunt.

I'm not accountant, but multimillionaire. I'm the only one who agrees with Tikaram here u think!

Stocks and properties valued same way. Marked to market. No need to sell to justify value.

Don't simply give up like that lah. I hope you can really understand. Marked to market is the only way to logically value assets and companies.

Yeah, sometimes when one thought that the other people are so stupid, the jokes go back to them !

But in many cases, new homeowners are forced into this. E.g., "don't marry my daughter if you dun hv your own house!"

Riskiest way? Most logical way I think. If holding properties worth 2m prior to crash and its value dropped to 1m, your net worth dropped by 1m. That does not mean that you were worth nothing prior to the crash. You were worth 2m. That is marked to market.

Bill gates or not: net worth is calculated the same way.

So I guess bill gates and warren buffet should sell all their shares to lock in gains. Otherwise, they are worth nothing. Who knows tomorrow their companies might be worthless. unless they sell now, they are worthless. With such mentality, no wonder you never hold any properties. 

Got to hand it for Amaya and bear bear...

88 pages and still at it...

No need to work izzit?

so if i would like to get my first property, which one should i go for ? new project condo? new landed or secondhand landed?    

you can see it coming, flippers in denial mode.

brace yourselves for the tsunami