Financial instruments Flashcards
If dividends received by the investor is greater than the portion of shares owned in the investee the excess on shares are considered?
Return on capital or a liquidating dividend.
What would be the classification for a security investment that management intend to hold for more than a year?
The investment will be classified as available-for-sale (AFS).
What would be the main reason for a security that was traded initial at a premium is now being traded at a discount ?
Market trades have increased.
How are unrealized gain/losses treated from transfers of category from AFS to Trading?
Gain or losses will be recorded immediately in the P&L.
How is the expected credit losses calculated for securities classified AFS and HTM?
if amortized cost is greater than FV and present value, then calculate the expected credit los (CECL) by subtracting amortized cost minus present value.
How are brokerage commissions, fees and taxes for the sales of securities accounted in the P&L?
These are added to the determination of the realized gain/(loss) on sale of securities.
What are the type disclosure required on the footnotes of the financial statements for investments?
Disclosure of credit risk is required for all investments. Market risk is not required per GAAP but is encourage.
