Falah Islamic Bank acquired an asset on Dec 30, 2022, for USD 1,000. A creditworthy client made
Question:
Falah Islamic Bank acquired an asset on Dec 30, 2022, for USD 1,000. A creditworthy client made a binding promise to purchase the asset on Jan 1, 2023, at 20% markup. However, on Dec 31, 2022, the asset was damaged in a fire, and its fair value was reduced to USD 900.
The bank should record the asset at:
a. USD 1,000 because under a binding promise all risk is borne by the client
b. USD 1,200 because the asset will be sold at a 20%
markup
c. USD 900 and record USD 100 as due from the client
d. USD 900 and charge USD 100 to profit and loss
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Related Book For 
Financial Reporting For Islamic Financial Institutions Accounting Standards Interpretation And Application
ISBN: 9781032464022
1st Edition
Authors: Abdul Rauf Mahar, Ayesha Bhatti, Muhammad Junaid Ashraf, Asfand Zubair Malik
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