FAR 5 Module 1

Question 1

What are the reclassification of Debt Categories to Unrealized Holding Gain/Loss

Answer 1

Question 2

What are the valuation of Debt securities for the Following classifications:

Trading
AFS - Available for Sale
HTM - Held to Maturity

Reported at?
Unrealized G/L?
Cash Flows?

Answer 2

Question 3

What are the Investment basics?

Answer 3

Question 4

What are the Unrealized Gains and Expected Credit Loss JEs?

Answer 4

Question 5

For Impairment of Debt Categories

What is the Expected Credit Loss formula and how are they applicable for the following:

Trading Security
Available for Sale
Held to Maturity

Answer 5

FACT CHECK: Expected Credit loss is actually: ECL = Amortized Cost - PV of Future Cash flows

Question 6

For the Sale of Debt securities, How would you calculate for the following:

Trading Security? What would be the JE’s

AFS

Answer 6

Question 7

What is the Fair Value Through Net Income (FV-NI) method, and how is dividend revenue recognized under this method?

Answer 7

Question 8

What is the core concept of the fair value option for investments?

Answer 8

Question 9

What is the treatment of credit losses on available-for-sale debt securities under the CECL model?

Answer 9

Question 10

What is the CECL rule for recognizing credit loss on AFS Securities?

Answer 10