R18 Flashcards
Calculate goodwill
Goodwill = purchase price - net FAIR value
Calculate net fair value
Net fair value = fair value assets - fair value liabilities
Financial asset categorized as HTM / Treatment of HTM (held to maturity):
Held to Maturity (IFRS):
- measured at cost or amortized cost
- unrealized gains not recorded anywhere
ex. investment in a long-term bond
Financial asset categorized as HFT / Treatment of HFT (Held for Trading):
HFT (Held for Trading):
- asset held for selling in the near term
- measured at fair value (through profit and loss)
- unrealized gains shown in the income statement
AFS / FV through OCI: Financial asset (neither HTM or HFT) under IFRS (Treatment of financial asset under IFRS)
AFS / FV through OCI - Financial asset under IFRS:
- measured at fair value
- unrealized gains or losses are shown as fair value in OCI.
Financial asset under GAAP (Treatment of financial asset under GAAP)
Financial asset under GAAP:
- measured at fair value
- available for sale category (only applied to debt securities; NOT investments in equity securities)
Liquidity ratios - current ratio
current ratio =
current liabilities
liquidity ratio - quick ratio / acid test
quick ratio / acid test =
current liabilities
liquidity ratio - cash ratio
cash ratio =
current liabilities
solvency ratios - long-term debt-to-equity
Long-term debt-to-equity =
Total equity
solvency ratios - debt-to-equity
Debt-to-equity =
Total equity
solvency ratios - Total debt-to-assets
Total debt-to-assets =
Total assets
solvency ratios - financial leverage
financial leverage =
total equity
