Fair Value Management Flashcards
value of the stock
If there is no principal market, then the price in the most advantageous market is the fair value of the stock. (Net is Higher)
fair value
fair value is an EXIT price.
Fair value includes transportation costs, but not transaction costs.
Level I, II, III
Level I measurements are quoted prices in active markets for IDENTICAL assets or liabilities only. Quoted prices in active markets for SIMILAR assets or liabilities are Level II inputs. A fair value measurement based on management assumptions only is a Level III measurement and is acceptable when there are no Level I or Level II inputs or when undue cost or effort is required to obtain Level I or Level II inputs. The level in the fair value hierarchy of a fair value measurement is determined by the level of the LOWEST level significant input.
interest on average capital balances
This interest is factored into the year end profits, i.e. if profit was 4K and partners getting 20K of interest, then YE loss is (16K)
for partnership withdrawal, dissolution or admission
The bonus method increases (or decreases) the individual partners accounts without changing total net assets of the partnership. Since the capital accounts of Beck and Chale decreased, goodwill was not recorded as an asset, but instead the bonus paid to Allen was charged against the capital accounts of the remaining partners. The goodwill method increases the individual partners accounts and also changes total net assets of the partnership.
the “bonus” method
the credit to the new partner’s capital account is calculated so that the new partner will receive the proper ownership percentage. The amount credited to the partners’ capital account as determined in this manner generally is not equal to the amount of the investment.
The primary beneficiary
is the entity that has the power to direct the activities of a variable interest entity that most significantly impact the entity’s economic performance and absorbs the expected VIE losses and/or receives the expected VIE residual returns.
variable interests.
Most liabilities, excluding short-term trade payables (accounts payable)
An option to acquire a leased asset at fair value at the end of the lease term
An explicit guarantee of the entity’s debt
sufficient equity investment at risk if
the entity can finance its own activities.
the facts and circumstances indicate that there is sufficient equity at risk.
the fair value of the equity investment at risk is greater than expected losses.
the entity’s equity investment at risk is at least as much as the equity investment of other non-VIE entities that hold similar assets of similar quality.
Under IFRS, a sponsoring company must consolidate an SPE if it controls the SPE.
Control exists when the sponsoring company is benefitted by the SPE’s activities, has decision making powers that allow it to benefit from the SPE, absorbs the risks and rewards of the SPE, and has a residual interest in the SPE.
