Investment (Pre-fi) Flashcards
This are assets held by an entity for the accretion of wealth through distribution (ex. interest, royalties, dividends, and rentals)
Investments
This is an interest or share in a debt or equity of another entity that is represented in a financial instrument, which being dealt on capital markets
Security
This represent ownership interest such as ordinary and preference shares
Equity securities
These are financial assets that represent the terms of loan between the creditor and the lender
Debt securities
These investments are measured at initial recognition and every reporting date at fair value
Equity Investments at Fair Value through Profit of Loss (FVPL)
These investments shall be recorded upon acquisition at purchase price plus directly attributsbke transaction costs
Equity Investments at Fair Value through Other Comrehensive Income (FVOCI)
This is the reduction in the par or stated value of the share capital accompanied by a proportionate increase in the number of shares outstanding
Share split
These are corporate distributions to the shareholders proportionate to the number of shares held by the latter
Dividends
These are generally recognized as receivable or as income when received
Cash dividends
These are the issuance of shares in the same class held by the shareholders
Share dividends
These are dividends that are distributable in the form of investee’s non-cash assets
Property dividends
These are issued when a company does not have sufficient funds to issue dividends in the near future
Scrip dividends
It is an entity over which the investors has significant influence
Associate
It is a join arrangement whereby the parties that have joint control of the arrangement have rights to the net assets of the arrangement
Joint Venture
What if an entity holds, directly or indirectly 20% more of the voting power of the investee?
Significant Influence
This are any securities issued by a company and sold to an investor, with an expectation to gain a future return
Debt securities
Investments are held for diverse reasons such as
for accretion of wealth, capital appreciation, ownership control, meeting business requirements and protection
Under this method, on initial recognition, the investment in associate is recognized at cost, and the carrying amount is increased or decreased to recognize the investor’s share of the profit of loss of the investee after the date of acquisition
Equity method
