Miscellaneous Topics

Question 1

Name the components of Other Comprehensive Income

Answer 1

FRACA
Foreign currency translation adjustment
Fair value changes that were originally written down as impaired for AFS securities
Reclassification adjustment
Revaluation surplus (IFRS only!)
AFS - Unrealized holding gains/losses from AFS securities
Cash Flows - Effective portion of cash flow hedges
Adjustments for pension plans

Question 2

How do you calculate a discount note

Answer 2

1. Multiply the Face Amount x Stated Interest x Time Interval.
2. Take that result and add this to the original face amount of the note. The result is the “Maturity Value” of the note. The proceeds and discount are based on this number.
3. Multiply the Maturity Value x Discount Rate x Time Interval. This number is the discount paid to the bank.
4. Subtract the discount paid to the bank from the Maturity Value of note.
5. The result in step 5 will be the proceeds received.