29 Flashcards
deck 29
what is the JE for pmt for rent kicker?
Rent exp 1500
cash 1500
what is the underlying and notional amt?
- underlying = right to buy $/share
* notional = right to buy amt of shares
what is the JE for G/L on CF hedge?
*loss:
CF hedge 60
OCI 60
*gain
OCI 60
CF hedge 60
what is a short position in a forward contract?
betting that the price will drop in the future. Compare initial date to settlement date
how will a company profit from a put and call option?
- buyer of put = stock goes down
- seller of put = stock goes up
- buyer of call = stock goes up
- seller of call = stock goes down
which type of exch rate would be the most important rate to use in a hedge to minimize the risk of currency fluctuation?
forward rate
what method do we use when the reporting currency is the functional currency?
we use the remeasurement method
what method do we use when the local currency is the functional currency?
we use the translation method
*if remeas. is needed, it would come before translation
do we roll forward RE by transferring NI to RE under translation method?
yes, this is the proper treatment
what are the primary factors in det’ing fxn’l currency for IFRS?
- currency that primarily influences entity’s labor, mat, and other costs of providing G + S’s
- currency of country whose competitive forces and reg’s primarily det. the entity’s SP for P+S’s offered
- whether the local economy of the foreign entity is highly inflationary
how do we calculate for investment in stock rights?
cost of sh’s acq’d
* (stock rights/stock rights+ex-rights)
do PD’s affect inter and intraperiod tax allocation?
no, they do not affect either
is cash collection a critical event for income recog. for cost recovery and installment methods?
yes,critical for both
when reporting transaction G/L, what must we do first?
convert the currency to USD, then report G/L
what is the direct/indirect method for reporting currency?
- direct = 1 unit of the domestic currency compared to other
* indirect = 1 unit of foreign price compared to domestic
what is the initial JE when a company purch’s goods in a foreign transaction?
Dr: purchases
Cr: A/P
will the exchange rate be irrelevant if paid in its own currency?
yes - only exchanges settled from foreign currency will have G/L.
when does a def’d (fake) loss occur in a sales-leaseback trans?
when SP < FV
- def’d loss = SP - CV
- if minor (<10%), recog. G/L immediately
under IFRS, in an op. sales-leaseback with SP > FV, how should we amort. it?
amort. over UL of asset
how is profit recog’d under an op. sales-leaseback calc’d for GAAP?
SP - CV - def’d portion
(for 10-90%) -> PV pmt compared to SP
*def’d portion is lesser of PV min pmt or FV and amort’d over lease life
what are “minor rights” in a sales-leaseback?
when PV of rent pmt is 10% or less of FV
*usually acct’d as op. leases
