FSA Flashcards
Investments in financial assets
Less than 20%
* No significant influence
*
Fair Value Through Profit or Loss (for Debt and Equity Securities)
o held for trading
o Carrying v= Mkt v
o Income statement –> dividend
o Rivalutazione o svalutazione investimento in P&L
- Fair Value Through Other Comprehensive Income (for Debt and Equity Securities):
o available-for-sale
o Carrying v= Mkt v
o Income statement –> dividend income
o Rivalutazione o svalutazione dell’investimento in OCI
IFRS 9
- Reclassification of equity securities –>not permitted.
- Reclassification of debt securities –>permitted only if the business model has changed.
- Equity Method
- Significant influence
- Inv in associates
No effect on equity and on liabilities
Acquisition Method
- Minority interest = equity and= to the proportion of the subsidiary that the parent does not own times the net equity of the subsidiary.
- Assets and liabilities I sum everything net of intercorporate transfer
- Equity the parent add the minority interest only
- IS –> I add all the sales and expenses BUT then I deduct form the net income the part related to the minority interes
- AUMENTO TUTTO L’INCOME STATEMENT CON 100% DEI REVENUES E DEI COSTI DELL’ACQUISTATA MA LEVO LA PARTE DELLA MINORITY INTEREST DAL NET INCOME ALLA FINE
Special Purpose Entities and Variable Interest Entities
- legal structure created to isolate certain assets and obligations of the sponsor.
- to serve a specific purpose (limited in scope)
- typical motivation = obtain low-cost financing.
- can take the form of a corporation, partnership, joint venture, or trust
- the entity does not necessarily have separate management or even employees.
- IFRS SPE need to be consolidated by entity which has control over it
- US GAAp qualifying SPE no need to consolidate
- U.S. GAAP uses the name variable interest entity (VIE) = SPE that meets certain conditions.
- VIE must be consolidated by the primary beneficiary (entity that has exposure to the majority of risks or receives majority of residual benefits)
Accruals ratio
Net operating assets / Avg net operating assets
Net operating assets = operating assets (i.e. receivables, inventory..) – operating liabilities ( i.e. payables)
Cash is NOT operating asset
Funded status of the plan (IFRS and USGAAP)
Fair value of plan assets – PBO
FV at the end of the yea
FV at beginning of year + Contributions + Actual return – benefits paid
PBO at end of the year
PBO at beginning of year +service cost + interest cost + past service cost + actuarial losses – benefits paid
TPPC (IFRS and USGAAP)
Contributions – (ending fund status – beginning funded status)
Ending PBO – Beginning PBO + benefits paid – actual return on plan assets
service cost + interest cost + plan amendments – actual return
Periodic pension cost (GAAP)
Service cost – amortization of actuarial gains + amortization of past service cost – expected return on plan assets
Pension expense (IFRS)–> quello che iscrivo in P&L
Service cost + past service cost + net interest expense
Interest cost
USGAAP = disc rate *(beg.PBO – past service cost)
IFRS= disc rate * (beg.Funded status – past service cost)
Interest coverage ratio
EBITDA / Interest expense
Asset turnover ratio
Revenues / Avg total assets
Current ratio
Current assets/current liabilities
Quick ratio
(Cash + ST securities + Receivables)/Current liabilities
Cash ratio
(Cash + ST securities)/Current liabiliteis
CAGR
((V tfuturo)/(V t0))^(1/n)
Hyperinflation
cumulative inflation 100% for three years = sum of three years
Inflation calculation = (1+ nominal interest rate) / (1 + real interest rate)
o US GAAp –> use temporal method
o IFRS–> Restate foreign currency adjusting for inflation, translate with current rates
o Will result in lower BS values –> translation losses will occur
three actuarial assumptions in the pension footnotes (pension expenses)
- discount rate to compute the PV of the pension obligations. –> it is Not a risk-free rate.
- rate of compensation growth =
- expected return on plan assets (U.S. GAAP only)
TO decrease pension expense
o high discount rates, low compensation growth rates
o Translation
conversion of functional currency into reporting currency
o Remeasurement
conversion of local currency into functional currency
What is Basel doing
- Basel: develops reg. framework and monitors adoption
Pension what goes in income statement and what in oci (USGAAP)
Current service cost
Past service cost
Interest cost
Expected return
Actuarial gains/losses
Funded status of the plan (FV plan assets – PBO)
Current service cost–> Income statement
Past service cost –>OCI, amortized over service life
Interest cost–> Income statement
Expected return–> Income statement
Actuarial gains/losses–> Amortized portion in income statement. Unamortized in OCI.
Funded status of the plan–> (FV plan assets – PBO) Balance sheet
Pension what goes in income statement and what in oci (IFRS)
Current service cost
Past service cost
Interest cost
Expected return
Actuarial gains/losses
Funded status of the plan (FV plan assets – PBO)
Current service cost–> Income statement
Past service cost –> Income statement
Interest cost–> Income statement
Expected return–> Income statement
Actuarial gains/losses–> All OCI, not armotized
Funded status of the plan–> (FV plan assets – PBO) Balance sheet
Tot tier 1 capital ratio
(Common tier 1 capital+ additional tier 1 cap)/(risk weighted assets)
Tot reg capital ratio
(Tot tier 1+tot tier 2)/(risk weighted assets)
LCR
Highly liquid assets / expected cf
Bank can stand a volume of LCR * 30 days
SFR
Available stable funding / required stable funding
Interest coverage ratio
EBITDA / Interest expense
Asset turnover ratio
Revenues / Avg total assets
CGO
net income − cash flow from operations − cash flow from investing.
