Financial Assets at Market Value Flashcards
How does the International Accounting Standards Board define investments?
The International Accounting Standards Board defines investments as assets held by an entity for (1) wealth accretion through distribution, (2) for capital appreciation, or (3) for other benefits like those from trading relationships.
How does the definition of investments describe the relationship between investments and the operating activities of an entity?
According to the definition, investments are assets not directly associated with the operating activities of an entity; they have an auxiliary relationship to the central revenue-producing activities of the entity.
What types of distribution are mentioned in the definition of investments?
The definition mentions distribution types such as (1) interest, (2) royalties, (3) dividends, and (4) rentals as ways in which investments contribute to wealth accretion.
What are some purposes for which investments are held?
Investments are held for diverse reasons, including the (1) accretion of wealth, (2) capital appreciation, (3) ownership control, (4) meeting business requirements, and (5) protection.
Describe the purpose of accretion of wealth through investments.
The purpose of accretion of wealth through investments involves generating regular income from sources such as interest, dividends, royalties, and rentals.
In what ways do investments contribute to capital appreciation, as mentioned in the text?
Investments contribute to capital appreciation through (1) holdings in land, (2) real estate for appreciation, and (3) direct investments in precious commodities like gold and diamonds.
What is one purpose mentioned for investments in subsidiaries and associates?
One purpose mentioned for investments in subsidiaries and associates is OWNERSHIP CONTROL.
How do investments meet business requirements?
Investments meet business requirements by contributing to funds such as sinking funds, preference share redemption funds, and plant expansion funds.
