FSA

Question 1

Investments in financial assets

Answer 1

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

Question 2

IFRS 9

Answer 2

• Reclassification of equity securities –>not permitted.
• Reclassification of debt securities –>permitted only if the business model has changed.

Question 3

• Equity Method

Answer 3

• Significant influence
• Inv in associates
  No effect on equity and on liabilities

Question 4

Acquisition Method

Answer 4

• 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

Question 5

Special Purpose Entities and Variable Interest Entities

Answer 5

• 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)

Question 6

Accruals ratio

Answer 6

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

Question 7

Funded status of the plan (IFRS and USGAAP)

Answer 7

Fair value of plan assets – PBO

Question 8

FV at the end of the yea

Answer 8

FV at beginning of year + Contributions + Actual return – benefits paid

Question 9

PBO at end of the year

Answer 9

PBO at beginning of year +service cost + interest cost + past service cost + actuarial losses – benefits paid

Question 10

TPPC (IFRS and USGAAP)

Answer 10

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

Question 11

Periodic pension cost (GAAP)

Answer 11

Service cost – amortization of actuarial gains + amortization of past service cost – expected return on plan assets

Question 12

Pension expense (IFRS)–> quello che iscrivo in P&L

Answer 12

Service cost + past service cost + net interest expense

Question 13

Interest cost

Answer 13

USGAAP = disc rate *(beg.PBO – past service cost)

IFRS= disc rate * (beg.Funded status – past service cost)

Question 14

Interest coverage ratio

Answer 14

EBITDA / Interest expense

Question 15

Asset turnover ratio

Answer 15

Revenues / Avg total assets

Question 16

Current ratio

Answer 16

Current assets/current liabilities

Question 17

Quick ratio

Answer 17

(Cash + ST securities + Receivables)/Current liabilities

Question 18

Cash ratio

Answer 18

(Cash + ST securities)/Current liabiliteis

Question 19

CAGR

Answer 19

((V tfuturo)/(V t0))^(1/n)

Question 20

Hyperinflation

Answer 20

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

Question 21

three actuarial assumptions in the pension footnotes (pension expenses)

Answer 21

1. discount rate to compute the PV of the pension obligations. –> it is Not a risk-free rate.
2. rate of compensation growth =
3. expected return on plan assets (U.S. GAAP only)

Question 22

TO decrease pension expense

Answer 22

o high discount rates, low compensation growth rates

Question 23

o Translation

Answer 23

conversion of functional currency into reporting currency

Question 24

o Remeasurement

Answer 24

conversion of local currency into functional currency

Question 25

What is Basel doing

Answer 25

• Basel: develops reg. framework and monitors adoption

Question 26

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)

Answer 26

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

Question 27

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)

Answer 27

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

Question 28

Tot tier 1 capital ratio

Answer 28

(Common tier 1 capital+ additional tier 1 cap)/(risk weighted assets)

Question 29

Tot reg capital ratio

Answer 29

(Tot tier 1+tot tier 2)/(risk weighted assets)

Question 30

LCR

Answer 30

Highly liquid assets / expected cf

Bank can stand a volume of LCR * 30 days

Question 31

SFR

Answer 31

Available stable funding / required stable funding

Question 32

Interest coverage ratio

Answer 32

EBITDA / Interest expense

Question 33

Asset turnover ratio

Answer 33

Revenues / Avg total assets

Question 34

CGO

Answer 34

net income − cash flow from operations − cash flow from investing.