SPV Bond BuyBack

During an audit I noted the following condition: We sold bonds at market (which was higher than par) to our subsidiary under a securitized program. Later we purchased the bonds back at par (which was now higher than market). I would benefit from any thoughts you may have as to whether this transaction seems appropriate.

Thanks

It's been a while since I worked with 23B, but I think that would prohibit any transactions between affiliates that are not at market level. Depending on the true relationship with the subsidiary you mentioned, it may or may not be considered an affiliate under 23A and 23B.

IAS 39 specifically deals with investments held in your 'trading book' or 'available for sale' book. Firstly, it is appropriate that all deals between affiliates be at market rates. Secondly, the bonds have to be 'marked to market' each month end. If they are in the trading book, the profit/loss is charged towards net income. If they are in the available for sale book, the profit/loss is charged towards shareholders equity.