Discounting of accounts payable has a positive effect on the quality of financial and tax reporting. Errors in the presentation of financial income from discounting long-term accounts payable at the time of its occurrence and amortization of the discount during the term of use on each subsequent balance sheet date may adversely affect the reliability of financial statements and lead to incorrect reflection of income tax.

Thus, following paragraph 4 of the Regulation (standard) of accounting (hereinafter P (S) BU) "Obligations" states the following:
"Current liabilities - liabilities that will be repaid during the operating cycle of the enterprise or must be repaid within twelve months from the balance sheet date."

That is, obligations in which term of performance comes within 12 calendar months are short-term.

Long-term liabilities - all liabilities that are not current. By paragraph 10 P (S) BU 11 long-term liabilities, which accrue interest, are reflected in the balance sheet at their present value.

Following paragraph 4 P (S) BU 11 present value - the discounted amount of future payments.

Besides, per paragraph 5 of UAS 11, a liability is recognized if its measurement can be measured reliably. It is probable that future economic benefits associated with the liability will flow to the Group.

If the previously recognized liability is not repayable at the balance sheet date, its amount is included in the income of the reporting period.

In accordance with the accounting policy, the company uses National Accounting Standards (standards) for business activities.

According to UAS 13 "Financial Instruments", a financial instrument is a contract that simultaneously gives rise to (increases) a financial asset in one enterprise and a financial liability or equity instrument in another.

Financial instruments include:
-main financial instruments such as receivables, payables, and shares or any derivative securities and
-derived financial instruments, such as options, futures, forwards, interest rate swaps and currency exchanges, the value derived from the underlying financial instrument, or the rate or price index of another underlying mechanism.

Per paragraph 29 of UAS 13, financial instruments are initially measured and measured at their actual cost, consisting of the fair value of assets, liabilities, or equity instruments granted or received in exchange for the relevant financial instrument and expenses, which are directly related to the purchase or disposal of a financial instrument (commissions, mandatory fees and charges for the transfer of securities, etc.).

Financial obligation - contractual obligation:
 a) transfer cash or another financial asset to another enterprise;
 b) exchange financial instruments with another company on potentially unfavorable terms.
 
Paragraph 30 of UAS 13 Financial Instruments provides that for each subsequent balance sheet date, financial assets are measured at fair value, except:
-receivables that are not intended for resale;
-financial investments held by the enterprise until their repayment;
-financial assets whose fair value cannot be measured reliably;
-financial investments and other financial assets that are not measured at fair value.

For each subsequent balance sheet date, financial liabilities are measured at amortized cost, except for financial penalties held for resale and liabilities for derivative financial instruments.

The carrying amount of financial assets that are not measured at fair value is reviewed for possible impairment at each balance sheet date based on an analysis of expected cash flows.

The amount of impairment loss on a financial asset is determined as the difference between its carrying amount and the present value of expected cash flows, discounted at the current market interest rate for the financial support, recognizing this difference as other expenses in the period.

Following UAS 12 “Financial Investments”: “Amortized cost of financial investment is the cost of financial investment with partial write-off due to a decrease in utility, which is increased (decreased) by the amount of accumulated amortization of the discount (premium).

Effective interest rate - the interest rate determined by dividing the amount of annual interest and discount (or the difference between annual interest and premium) by the average cost of investment (or liability) and the cost of its repayment.

The effective interest rate method is a method of calculating the amortization of a discount or premium, in which the amount of depreciation is defined as the difference between income at a fixed interest rate and the product of the effective interest rate and amortized cost at the beginning of the period for which interest is accrued.

Financial investments are initially measured and accounted for at cost.

Financial investments (other than assets held by the enterprise until maturity or accounted for using the equity method) are carried at fair value at the balance sheet date.

The amount of the increase or decrease in the carrying amount of financial investments at the balance sheet date (except for investments accounted for using the equity method) is included in other income or other expenses, respectively.

The enterprise's financial investments until maturity are recognized at the balance sheet date at the amortized cost of financial assets.

The investor amortizes the difference between the cost and redemption of financial investments (discount or premium on acquisition) during the period from the date of purchase to their redemption date using the effective interest rate method.

According to IAS 28 Impairment of Assets, the present value of future net cash flows from an asset is determined by applying the appropriate discount rate to future cash flows from the asset's continuing use and sale (write-off) at the end of its useful life (operation).

Future cash flows from the asset are determined based on the enterprise's financial plans for a period not exceeding five years.

Suppose the company has experience determining the amount of expected return on assets and available calculations that indicate the reliability of the assessment of future cash flows. In that case, such an evaluation may be determined based on the company's financial plans, covering a period of more than five years.

The discount rate is based on the market interest rate (before tax) used in transactions with similar assets.

In the absence of a market interest rate, the discount rate is based on the interest rate on the enterprise's possible loans or is calculated by the weighted average cost of capital of the enterprise.

In determining the discount rate, risks are taken into account and the risks that were taken into account in determining future cash flows.

Therefore, at the date of the accounts payable, the debtor must determine the present (fair) value of its obligation.

The amount of the discount (the difference between the future and the present value of the obligation) is included in income at the time of receipt of the loan and debt under debt transfer agreements and costs - in the process of amortizing such a discount during the term of the loan.

The amount of amortization of the discount or premium is accrued simultaneously with the accrual of interest (income from financial investments) to be received and is reflected in other financial payments or other financial expenses with a simultaneous increase or decrease in the carrying amount of financial assets, respectively.

The discounting operation is reduced to the formula:
 PV = FV / (1 + i) n,
 where: FV - future value;
 PV - present value;
 and - discount rate (average annual discount rate of NBU refinancing);
 n is the term (number of periods).

The amounts of financial income from discounting accounts payable are reflected in another financial gain of the Statement of financial performance, and financial expenses (amortization of the discount) - as part of the Statement of financial performance expenses.