All praise is due to Allah, may
peace, salutation and the blessing be upon the prophet Muhammad (ﷺ), his entire family, his companions and those that follow their
footsteps with righteous until the last day. Indeed measurement of the Murabaha
capital has contributed immeasurably at upon the Acquisition of Assets. Therefore,
I will be given the highlights of how the Murabaha assets of the organization
have been recognizing by the banks and other financial institutions throughout
the history of the Murabaha Capital recognition principle that has been
implemented at price discount if obtained after the acquisition. Moreover, the
Murabaha Capital recognitions principles of accounting and measurement and upon
financing the customer. Furthermore, Murabaha Financing will be the outlet of
recognition will be highlighted first after that the Murabaha Assets recognition
which are based on three main focal points that are:
)
The
Murabaha Assets recognition principles Upon the Acquisition of the Assets.
2)
The
Murabaha Assets recognition principle at price discount if obtained after
acquisition.
3)
The
Murabaha Assets recognition principle upon financing the customer.
Firstly,
the Murabaha assets recognition principles upon the acquisition of the assets
is in three forms or category with an obligation, without an obligation and
provision. Surely, upon acquisition of assists with an obligation the,
Murabaha assets must be measured at the impaired or lower historical cost not
to overvalue farsightedness and to defend the purchaser for that the reason
the Murabaha assets upon acquisition of assets with an obligation have to lower
their historical cost and protect their buyer or purchaser. Moreover, upon
acquisition of Assets without any obligation, the Murabaha assets must be
measured at the cash equivalent value of upon acquisition of assets that will
reflect the current value and defend the financier or the bank in measuring the
Murabaha assets without any obligation.
Finally, the provision of upon
acquisition of the Murabaha assets reflect any decline in between the cash
equivalent value and the acquisition cost
of in measuring of the Murabaha assets with the used of the provision to
reflect the changes in between them. Finally, according to the AAOFI standard
it necessitates that available for sale after the acquisition on the basis of
Murabaha must be measure at their historical cost. Therefore Islamic financial
institutions must make disclose of note on the financial statement if the
Islamic bank or Islamic financial institution has made a provision in that the period in operation for the decline in value of the Islamic financial
institution assets.
Secondly,
the Murabaha assets recognition principle at the discount price if obtained
after the acquisition in measuring the Murabaha assets must not be treated as
returns or revenue however to diminish the cost of the pertinent or
relevant goods except approved via SSB
or Islamic bank’s Shariah supervisory board according to the AAOFI standard.
Moreover, this is very helpful for the bank to measure the Murabaha assets to
discount their pertinent goods without approval from SSS to give the bank
ability to maintain the stability in executing the measurement of the Murabaha
Assets.
Furthermore, there are two different transactions instruments in
Murabaha financing. Islamic bank has been the first to perform this transaction
to purchase the asset from the developer than an Islamic bank will record this to
it accounts book by debiting the purchased asset and crediting the cash expend
on the asset purchase from the developer and secondly Islamic bank than sell
the same to asset purchase from the developer to the customer or the client and
finally, the Islamic bank will debit cost plus profit which the Murabaha financing;
credit the cost of the asset and also credit deferred profit, then the marked
up to the amount from Murabaha financial
Thirdly,
the Murabaha assets recognition principle upon financing the customer which
mean the bank or financier must record this receivable from the particular customer
at the face value which the means the financier or bank to deduct the cash
equivalent value from (less) the provision aimed of the doubtful debts.
Moreover, what is a cash equivalent…..? Cash equivalent is the number of monetary a unit that will be realized if a particular asset was sold on a cash basis in the regular the course of the Islamic financial institution at an existing date. For the reason
that Islamic financial institution used this know changes if it negative or a decline of assets which means the cash equivalent is lesser than the doubted
debt is not good for the Islamic financial institutions or financier to operate
on. Moreover, if such a thing happens the bank will use the Hamish Jiddiyah
which mean the commitment money to cover the loss in case it happens.in another
way, when the doubtful debt is lesser than the cash equivalent the Islamic the financial institution, will release the incline of the assets.
In conclusion, Murabaha is measured base on
the Assets recognition principles Upon the Acquisition of the Assets, Assets
recognition principle at price discount if obtained after acquisition and
the Assets recognition principle upon financing the customer which are
very helpful for the Islamic financial institution to operate in fully comfortable an environment with the conformity of Islamic Shariah law in regards to the Islamic
financial institution operation. Therefore, Assets recognition principles
Upon the Acquisition of the Assets is of three types with an obligation,
without an obligation and provision; with obligation, Murabaha assets must be
measured at the impaired or lower historical cost, not to overvalue
farsightedness and to defend the purchaser. Without obligation, assets must be
measured at the cash equivalent value of upon acquisition of assets that will
reflect the current value and defend the financier.
Finally the
provision Murabaha assets reflect any decline in between the cash equivalent
value and the acquisition cost. Moreover, Assets recognition principle at
price discount if obtained after acquisition Murabaha assets must not be
treated as returns or revenue however to diminish the cost of the pertinent
except approved by Islamic bank’s Shariah supervisory board. Furthermore, the
Assets recognition principle upon financing the customer which implies
the Islamic financial institution must record the receivables from
their client at their face value. For the reason that the Islamic financial
institution to reduce their cash equivalent value less from the provision.
If the financial institutions are stick to these principles of Murabaha in their
transactions they will be successful both this life and hereafter, may Allah
(S.W.T) forgive us and grant us the understanding of the deen (religion) and
internalized it our daily life to contribute to the development of the Ummah of
the prophet (ﷺ) until the last day
sub-hanaka Allahuma bi hamdika nashadu an Allaha Allah ant wa tasqfiruka wa
atubu illaik jazakallahu Khair wa salam.
Bibliography
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Preparation and Presentation of Financial Statements. London. United
Kingdom: International Accounting Standards Board (IASB).
(IASB), I. A. (2014). IASB Consultative Group on
ShariahCompliant Instruments and Transactions. Kuala Lumpur, Malaysia.:
International Accounting Standards Board (IASB).
AAIFI. (2008). Financial accounting standards.
Manama, Bahrain: Accounting and Auditing Organization for Islamic Financial
Institutions.
MALAYSIA), B. N. (2013). MURABAHA. MEDAN
KUALA LUMPUR: BANK NEGARA MALAYSIA (CENTRAL BANK MOF MALAYSIA).
Nur, A. M. (2014). RECORDING AND REPORTING
ISLAMIC FINANCIAL INSTRUMENTS. INCEIF (Global University in Islamic
Finance.
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