Filter by Categories
Accounting
Banking

Islamic Finance




Ancillary Wa’ad


A type of wa’ad (promise) that is embedded in, or associated with, an Islamic finance arrangement (contract). By nature, the wa’ad is part of the structure of the transaction and doesn’t stand out by its own. An example is wa’ad bil-shira’a (promise to purchase) that is attached to a Murabaha transaction: the purchase orderer/ potential buyer gives a promise to the seller whereby expressing intention to proceed with the transaction by purchasing the asset, subject matter of the transaction.

In terms of accounting effect, this wa’ad (as opposed to a product wa’ad) does not give rise to any asset or liability as long as it doesn’t result in any actual or potential losses to the seller (that is, unless it transpires to an onerous commitment or turns its host contract to an onerous contract).



ABC
The last three decades have witnessed the modern rebirth of Islamic finance both in terms of literature and practice. Islamic banks and ...
Watch on Youtube
Remember to read our privacy policy before submission of your comments or any suggestions. Please keep comments relevant, respectful, and as much concise as possible. By commenting you are required to follow our community guidelines.

Comments


    Leave Your Comment

    Your email address will not be published.*