Loan Origination Fee — EIR Setup at Disbursement
Establishing the deferred origination fee as part of the amortized cost calculation under IFRS 9.
| Account Name | Type | Debit ($) | Credit ($) |
|---|---|---|---|
| Loans Receivable (Gross) | Asset (+) | 100,000.00 | - |
| Deferred Origination Fee (Contra-Asset) | Contra-Asset (+) | - | 2,000.00 |
| Cash / Borrower Account (Net Disbursed) | Asset (−) | - | 98,000.00 |
💡 Accountant's Note
Under IFRS 9, the loan is initially measured at fair value plus transaction costs. Origination fees received are deducted from the gross loan to arrive at the net amortized cost carrying amount. The effective interest rate is computed on this net amount.
Practitioner & Systems Framework
💻 ERP Architecture
In SAP Bank Analyzer (Financial Instruments), EIR is automatically recalculated each period using the interest accrual engine. Configure the fee code as 'received at origination' in the product definition so the system includes it in EIR. In Oracle FLEXCUBE, the EIR is stored in the contract and drives the monthly interest income posting.
⚠️ Audit Flags
External auditors test EIR calculations on a sample of loans. A common finding is that processing fees charged by third parties (not incremental direct costs) are incorrectly included in the EIR calculation. IFRS 9 B5.4.1 lists what qualifies as an incremental cost.
📄 Required Documentation
Loan origination fee schedule, EIR calculation workbook signed off by treasury/finance, product definition documentation from core banking system, and auditor's confirmation of EIR methodology.
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Expert Analysis by Qusai Ahmad
General Accountant Supervisor & IFRS Specialist
Specialized in SAP GUI automation and Middle Eastern tax compliance. Building digital tools for the next generation of finance leaders.