16 Flashcards

deck 16

1
Q

when transferring FINANCIAL assets, how do you record?

A

allocate previous CV of entire fin. asset b/w both of these on relative FV’s at date of transfer:

(1) participating int(s) sold
(2) participating int. that continues to be held by transferor

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2
Q

what would cause a bonds’ decline in market value?

A

interest rates increasing since purch. of bond

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3
Q

how do you calc. the investment in bonds?

A
  • interest revenue - interest receivable = discount amort’d
  • CV YE = discount amort’d + CV bond on BB date
  • int rev = CV bond*yield
  • int rec.= face*face rate
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4
Q

how are unrealized G/L reported?

A

TS = FV to IS, AFS = FV to OCI

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5
Q

what is the rule for dividend revenue?

A

div. revenue under FV method should be recog’d to extent of cumu. earnings since acq. and return of cap. beyond that point (div’s not in excess of undistr. earnings = DI)

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6
Q

what is the reporting for marketable debt sec’s that the company has intent and ability to hold to maturity?

A

both LT and ST are reported at CV (amortized cost) UNLESS there is a perm. decline in market value

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7
Q

what is the treatment for impairment of AFS debt sec. that is perm.?

A

write down the asset to lower FV and record loss on IS

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8
Q

what disclosures of risks are required for most fin. insturments?

A

conc. of credit risk is req’d, market risk is ENCOURAGED
. conc. of credit risk is disclosed in NOTES to FS’s

*CV and FV are disclosed for most FS’s too

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9
Q

what is the FV option?

A

follows same rules as TS’s. eligible for AFS and equity -sig infl.

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10
Q

what is excluded for FV option?

A

invest in sub’s, pen. ben A/L, A/L recog’d under leases

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11
Q

how are equity sec. G/L reported?

A

they are reported as unrealized G/L on the IS as they occur

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12
Q

when do you realize a G/L?

A

upon sale. brokerage fees are included in realized losses

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13
Q

what is the exception to not consolidating a majority-owned sub?

A

when the sub is in legal reorg. or bankruptcy or operates under severe foreign currency exch. restrictions

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14
Q

when a P-S relationship exists, consol. FS’s are prep’d in recognition of the acct concept of:

A

economic entity (ID’d w./ a unit of acct’ty)

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15
Q

what is the rule for a sub owning 50%+ of another sub?

A

vertical chain: 3rd co. into sub, then sub into P

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16
Q

what is a char’ of primary ben. of a VIE?

A
  • right to rec. expected VIE residual returns
  • obligation to absorb expected VIE losses
  • power to direct act’s of VIE
17
Q

what does not represent variable interests?

A

ST liabilities (A/P), but most liabilities rep. VIE

18
Q

what would indicate that an entity has an insufficient level of equity investment at risk?

A

when the entity’s equity invest at risk is LESS THAN the equity invest at risk of similar non-VIE entities

19
Q

under IFRS, when does a sponsoring company have to consol. a SPE?

A

if the company “controls” the SPE (control = co. ben’d from act’s, decision making power, and absorb risks and rewards and has residual int)

20
Q

what disclosures does an entity have to make with an equity method investment in another company?

A

they only need to disclosure the company’s acct policy

*they do NOT need names, reason, or litigation info