Introduction
The NIF C-5 – Advance Payments establishes the criteria for recognition, valuation, presentation and disclosure of advance payments. In the notes to the financial statements, entities must provide sufficient information on the nature, accounting policies and possible impairments of such payments.
These disclosures are necessary for users of financial information to understand the impact that advances have on the entity's financial position and results.
1. General disclosure rules
According to the NIF C-5, the following aspects must be included in the notes:
- Breakdown of advance payments by nature (income, insurance, licenses, etc.).
- Accounting policies applied for their recognition.
- Impairment losses and reversals recorded during the period.
2. Comparative example of disclosure in notes
Note X – Advance payments
(Figures in thousands of pesos)
| Concept | 2024 | 2023 |
|---|---|---|
| Advance office rental | 600 | 500 |
| Prepaid insurance | 450 | 420 |
| Software licenses | 200 | 180 |
| Others | 0 | 50 |
| Total advance payments | 1,250 | 1,150 |
Accounting policy:
Advance payments are recognized as a current assets, except those that are consumed over a period of more than 12 months, which are classified as non-currentThey are amortized over time or as economic benefits are consumed.
Impairment losses:
- In 2024, an impairment loss was recognized for $50 related to obsolete technology licenses.
- No losses or reversals were recorded in 2023.
3. Conclusions
- The NIF C-5 requires transparency in the information on advance payments, since they represent resources already disbursed whose economic benefit will be received in the future.
- He comparative 2023 vs 2024 It allows us to identify an increase in insurance and advance rent, as well as the recording of an impairment loss on technology licenses.
- Clear disclosure helps information users evaluate the recoverability and consumption of the advances.
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