Publication:
Accounting for the property acquisition: the case of musharakah mutanaqisah
Abstract
This case was developed based on a real-life experience related to an lslamic equity home financing contract (ie. Musharakah Mutanaqisah) between a Malaysian Islamic Bank and their customer. The Musharakah Mutanaqisah (MM) Financing mode has gained popularity in house financing in Malaysia, where the bank and customer enter into a contract of joint property ownership and the customer's ownership of the asset gradually increases throughout the financing period and fully owns the asset after the last financial settlement. This case aims to: illustrate the process of property acquisition using the MM financing mode; account the various transactions involved in MM financing; account capitalisation of acquisition costs; recognise and disclose financial assets/liabilities; and determine Fair value of the MM assets. Users of the case are assumed to be familiar with the various regulatory requirements and theoretical foundation of the "accounting for Islamic Financial transactions" from reporting perspectives of IFRS/MFRS (International Financial Reporting Standards/Malaysian Financial Reporting Standards) and the AAOIFI (Accounting and Auditing Organization for lslamic Financial lnstitutions).
Keywords
lFRS/MFRS , Partnership , Musharakah mutanaqisah , Financial assets , Financial liabilities
Citation
Muhamad Sori, Z. (2018). Accounting for the property acquisition: the case of musharakah mutanaqisah. In Ahmed Ali Siddiqui, Sarwat Ahson & Shazia Farooq. (Eds.), Case studies in Islamic finance and Shari'ah compliance (pp. 160-170). Karachi, Pakistan: IBA Press.
Publisher
IBA Press
Available in physical copy only (Call number: KBP 940.2 C337)