Detailed Analysis of Islamic Finance Instruments and Their Impact

This presentation provides a comprehensive analysis of Islamic finance, focusing on various short-term and long-term financial instruments. It begins with an introduction to the structure of Islamic finance and then delves into the specifics of Murabaha, Musharaka, Ijara, Mudaraba, and Sukuk, explaining their characteristics and applications. The presentation further examines the impact of these instruments on financial statements, highlighting the importance of understanding Islamic financial principles for businesses. It explores the accounting treatments for each instrument, referencing relevant accounting standards like IAS 1. A case study involving the Doğuş Group is used to illustrate the practical application of these concepts. The presentation concludes with recommendations for companies using Islamic finance and emphasizes the significance of adhering to Shariah-compliant regulations and accounting standards. References to key publications in the field are also included.

TITLE
Research and Analysis Project

TABLE OF CONTENT
 Introduction
 Different kinds of short term and long term Islamic financial instruments
 Impact of short term and long term financial instruments over financial statements
 Accounting treatment of Islamic financial instruments
 Islamic financial transaction of murabaha contracts
 Treatment of Islamic financial transaction of Mudharabah
 Treatment of Islamic financial transaction of Musharakah
 Recommendation
 Conclusion
 References

INTRODUCTION
The power point presentation is based on analysis of Islamic
finance and its structure. In this PPT detailed analysis of various
kinds of instruments of Islamic finance, impact of various kinds of
financial instruments on company’s financial statements is
mentioned. In order to make proper understanding of financial
structure of above Islamic finance a company is chosen that is
Doğuş Group.

DIFFERENT KINDS OF SHORT TERM AND LONG TERM
ISLAMIC FINANCIAL INSTRUMENTS
Different forms of finance are possible and are differentiated between short-term and
long-term funding methods. About Islamic sources of money, the most crucial fact is
that it is founded on Islamic values and morality. Below is a comprehensive overview
of the various forms of islamic financial institutions and their use-
 Murabaha
 Musharaka
 Ijara-
 Mudaraba
 Sukuk

CONTINUE
Murabaha- The dynamic pricing financing that is essential under
the Islamic funding system is also regarded as Murabaha. The
phrase is derived from the Arabic means benefit, known as Ribh.
Under such a, the investor and dealer agree on the investment's
cost and sign-up value. Basically, Murabaha is not an interest-
bearing loan, but it is considered an effective means of credit
selling.

CONTINUE
Musharaka- The other method of source of liquidity
introduced by the banking is Musharaka. It is the mutual or
the arrangement of the relationship, since partners share their
gains and liabilities with the company in this. It is essentially
an arrangement by which the bank contributes the funds
combined with the organisation's resources.

CONTINUE
Ijara- Ijara is an Arabic term that refers to renting something.
Underneath the Ijara concept, consumers or customers may make
use of goods bought and purchased by the Islamic bank, which is
often offered at a fixed price for a fixed time span. This method of
finance is identical to the lease arrangement and motor cars,
plants, equipment will also be the commodity used in this deal.

CONTINUE
Sukuk- Sukuk is linked to the traditional definition in which a
special-purpose vehicle (SPV) is generated or installed for the
purpose of buying assets and making financial statements, and
afterwards the possession of those properties is passed to a group
of investors with bonds reflecting the reasonable and fair interest
of such resources.

CONTINUE
Mudaraba- It is a type of silent relationship that is made up of
labour or capital. It is between the owners of the property, who
really is the supplier of the money, and the Mudarib Islamic bank.
One party participates in this form of funding and the other
looking after the performance of the organisation. The guy making
expenditure is recognized as the Rabb-ul-maal, as well as the
other individual overseeing the job is identified as the Mudharib,
and the money raised is known as Raas-ul-Maal.

IMPACT OF SHORT TERM AND LONG TERM FINANCIAL INSTRUMENTS OVER
FINANCIAL STATEMENTS
Awareness of the values of Islamic financial is critical to understanding the effect of
financial products. Islam has mapped out the principles and priorities that fulfill the
economic needs of human existence. It can be claimed that the use and enforcement
of Islamic finance provides businesses with guidelines and guidelines to make
investments in a specific sector that helps to meet and meet the financial and social
goals determined by Islam. With the central vision of facilitating and operating the
economy in a prosperous manner, Islamic values are being developed. In basic
words, it is ultimately the governing book from which capital is rescued from being
spent in the wrong direction.

ACCOUNTING TREATMENT OF
ISLAMIC FINANCIAL INSTRUMENTS
Under Islamic financial principles and traditional accounting
procedures, the financial treatment will depend. This difference in
the procedure creates various consequences for the company's
performance and financial performance. The effect of the
applicable traditional finance accounting principles relating to
various Islamic financial instruments and their choose has on the
planning, analysis and filing of the Doğuş Group financial
statements should therefore be understood and applied.

ISLAMIC FINANCIAL TRANSACTION OF MURABAHA
CONTRACTS
IAS 1 allows the corporate entity to file its financial accounts in
this respect, and the related information annexed to it, except the
cash balance statement, must be centred on an operating
accounting period. As it conforms to the Shariah rules, the Islamic
Bank will apply this requirement in the planning and presentation
of its final reports with no modifications.