IFRS 9, Financial Instruments Understanding the Basics Introduction
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3.5 FINANCIAL ASSETS and LIABILITIES Definitions 1. Financial Assets Include Cash, Equity Instruments of Other Entities
128 SU 3: Financial Accounting I 3.5 FINANCIAL ASSETS AND LIABILITIES Definitions 1. Financial assets include cash, equity instruments of other entities (e.g., preference shares), contract rights to receive cash or other financial assets from other entities (e.g., accounts receivable), etc. 2. Financial liabilities include obligations to deliver cash or another financial asset (e.g., bonds or accounts payable), obligations to exchange financial instruments under potentially unfavorable conditions (e.g., written options), etc. Initial Recognition 3. A financial asset or liability is initially recognized only when the entity is a party to the contract. Thus, contract rights and obligations under derivatives are recognized as assets and liabilities, respectively. a. A firm commitment to buy or sell goods or services ordinarily does not result in recognition until at least one party has performed. 1) However, certain contracts to buy or sell a nonfinancial item may result in recognition of an asset or liability. a) For example, a firm commitment to buy a commodity in the future that (1) can be settled in cash and (2) is not held for the purpose of receiving the commodity is treated as a financial instrument. Accordingly, its net fair value is recognized at the commitment date. b) If an unrecognized firm commitment is hedged in a fair value hedge,a change in its net fair value related to the hedged risk is recognized as an asset or liability. 4. An issuer of a financial guarantee initially recognizes a liability and measures it at fair value. Subsequent measurement is at the greater of (a) the amount based on accounting for provisions or (b) the amortized amount. -
A Practical Guide to IFRS 7 for Investment
Asset Management A practical guide to IFRS 7 For investment managers and investment, private equity and real estate funds April 2010 PricewaterhouseCoopers’ IFRS and corporate governance publications and tools 2010 IFRS technical publications IFRS disclosure checklist 2009 IFRS manual of accounting 2010 Outlines the disclosures required by all IFRSs PwC’s global IFRS manual provides published up to October 2009. comprehensive practical guidance on how to prepare financial statements in accordance with IFRS. Includes hundreds of worked examples, extracts from company reports and model financial statements. IFRS pocket guide 2009 Provides a summary of the IFRS recognition and measurement requirements. Including currencies, A practical guide to IFRS 8 for real estate entities assets, liabilities, equity, income, expenses, business Guidance in question-and-answer format addressing combinations and interim financial statements. the issues arising for real estate entities when applying IFRS 8, ‘Operating segments’. Illustrative IFRS financial statements 2009 – investment funds Updated financial statements of a fictional investment fund illustrating the disclosure and A practical guide for investment funds presentation required by IFRSs applicable to to IAS 32 amendments financial years beginning on or after 1 January 2009. 12-page guide addressing the questions that are The company is an existing preparer of IFRS arising in applying the amendment IAS 32 and IAS 1, financial statements; IFRS 1 is not applicable. ‘Puttable financial instruments and obligations arising in liquidation’, with a focus on puttable instruments. Illustrative IFRS financial statements 2009 – private equity A practical guide to new IFRSs for 2010 Financial statements of a fictional private equity 48-page guidance providing high-level outline of hte limited partnership illustrating the disclosure and key requirements of IFRSs effective in 2010, in presentation required by IFRSs applicable to question and answer format. -
ARC Financial Instrument General Requirements
ARC Financial Instrument General Requirements Each applicant must provide a Financial Instrument in the required form and amount to obtain and maintain ARC accreditation. The Financial Instrument serves as, among other things, a guarantee for the financial transactions issued under your ARC number. What forms of coverage are acceptable? There are three acceptable types: 1. Bond Request a performance or financial guarantee bond type from a surety. The ARC bond form is found at https://www2.arccorp.com/globalassets/forms/aas/306ins.pdf. 2. Irrevocable Letter of Credit (LOC) Guarantee of payment issued by a federally insured bank, credit union or other lending institution acceptable to ARC. The ARC LOC form is found at https://www2.arccorp.com/globalassets/forms/aas/inst308.pdf. 3. ARC Cash Security Deposit (CSD) A cash deposit made directly to ARC as an alternative to a bond or letter of credit. The CSD Agreement is found at https://www2.arccorp.com/globalassets/forms/aas/form309.pdf . Required Amount for New Applicants & Type 5 Ownership Changes Applicants New Applicants $20,000.00 is the minimum amount of coverage that must be provided by each Agent and CTD applicant. (collectively referred to here as “Agent”) This amount will remain in effect for two years from the date of approval of the application unless the amount is required to be higher as provided in the Agent Reporting Agreement*. ( *Unless otherwise stated in this summary, the terms “Agent” and “Agent Reporting Agreement” (“ARA”) also include Corporate Travel Department (CTD) and Corporate Travel Department Reporting Agreement. (CTDRA).) After two years, the amount may be reduced to $10,000.00, unless a higher amount is required by the terms of the ARA. -
Hedge Accounting FBS 2013 USER CONFERENCE
9/12/2013 Hedge Accounting FBS 2013 USER CONFERENCE Purpose of a Hedge • Provide a change in value of the hedging instrument in the opposite direction of the hedged item. • For tax purposes, the gains or losses on from hedging activities are recognized when hedges are lifted • For accounting purposes, hedging gains/losses are recognized in the period the gains or losses occur – Hedging is consider normal business operation so should be matched to gross revenue and expense 1 9/12/2013 What is Hedging? • Hedging is a risk management strategy that attempts to offset price movements of owned assets, planned production of a commodity or good, or planned purchases of commodity or good against a derivative instrument (which generally derives its value from an underlying physical commodity). • It is not an attempt to make money in the futures and options markets, but rather an attempt to offset price changes in the cash market, thereby protecting the producers net income. What is Not Hedging? • Speculation – Taking a futures or options position in a commodity not owned or produced. – Taking the same position in the futures or options market as exists (or will exist) on the farm. • Forward contracts – Fixed price, delayed or deferred price contracts, basis contracts, installment sale contracts, etc. 2 9/12/2013 Tax Purposes • May be different from GAAP • An agricultural producer normally reports hedging gains or losses when the hedge is closed (similar to GAAP). • However, if the producer meets certain requirements, they can elect to report all hedging gains and losses on a mark- to-market basis (i.e. -
The Incidence of IFRS 7 on Financial Reporting a Meta-Analysis
International Journal of Business and Management Invention (IJBMI) ISSN (Online): 2319-8028, ISSN (Print):2319-801X www.ijbmi.org || Volume 10 Issue 3 Ser. I || March 2021 || PP 43-50 The Incidence of IFRS 7 on Financial Reporting A Meta-Analysis Marta Tache Doctoral School of Accounting, Bucharest University of Economic Studies, Bucharest, Romania ABSTRACT A better comprehension of the financial reporting is possible by placing the role of risk disclosures in its IFRS 7 (International Financial Reporting Standards) framework. This paper provides a meta-analysis of the risk disclosures under IFRS 7 Financial Instruments: Disclosures and its role in the quality of financial reporting. Accounting figures are frequently used by shareholders to monitor whether managers have fulfilled their contractual obligations and to restrict discretionary managerial power to promote personal interests. In a jurisdiction, there is an essential element for the development of an efficient corporation, namely a transparent capital market and the overall development of the economy. The corporate disclosure was examined by researchers to provide meaningful information about the annual reports. By investigating the previous specialized literature, the findings show that the financial disclosure requirements represent a consistent requisite in the transparency level of financial reporting under IFRS. There is some evidence in the prior literature which argues the insignificance of risk disclosures. At the same time, some researchers are neutral concerning the role of risk disclosures on financial reporting under IFRS. To sum up, the significant information of the disclosures, from the annual reports, represent a useful requisite for a transparent capital market of the world. KEY WORDS: IFRS 7, financial reporting, disclosures, risk, globalisation. -
Feedback Statement Amends IFRS 7.Indd
October 2010 Project Summary and Feedback Statement Transfers of Financial Assets Amendments to IFRS 7 Financial Instruments: Disclosures At a Glance We, the International Accounting The amendments will also make it Standards Board (IASB), amended easier to assess whether an entity has IFRS 7 Financial Instruments: Disclosures undertaken transactions to achieve a in October 2010 by issuing Transfers of particular accounting result close to Financial Assets. the end of a fi nancial period—so-called The objective of the amendments is to ‘window dressing’. improve the quality of the information IFRS 7 does not prevent entities from reported about: disclosing the type of information • fi nancial assets that have been these amendments will require. But ‘transferred’ but are still, at least it is clear that users of fi nancial partially, recognised by the entity statements, and other interested because they do not qualify for parties, think the quality of disclosures derecognition; and has not been adequate. These amendments address those concerns. • fi nancial assets that are no longer recognised by an entity, because they qualify for derecognition, but with which the entity continues to have some involvement. 2 | TransfersTransfers of Financial AssetsAssets Background These amendments to IFRS 7 are designed to improve The amendments also result in a closer alignment Unfortunately, the global fi nancial crisis forced the the transparency of off balance sheet securitisations of IFRSs and US generally accepted accounting two boards to take separate strategies to improve our and similar transfer transactions. principles (GAAP) disclosure requirements for respective requirements. transferred fi nancial assets. We are responding to requests from users of fi nancial In March 2009 we published an exposure draft statements, regulators—including the Financial We have been considering the derecognition proposing improvements to the derecognition Stability Board—and others. -
IATA Industry Accounting Working Group Guidance IFRS 15, Revenue from Contracts with Customers
IATA Industry Accounting Working Group Guidance IFRS 15, Revenue from Contracts with Customers 2nd Edition Issued May 2018 IATA Industry Accounting Working Group Guidance IFRS 15, Revenue from Contracts with Customers NOTICE DISCLAIMER. This document has been compiled by the IATA Industry Accounting Working Group (IAWG), which consists of senior finance representatives from IATA member airlines. This working group’s mandate is to promote consistency in the application of International Financial Reporting Standards (IFRS) and to lobby accounting standard setters to take into consideration the interests of airlines globally. It is distributed with the understanding that IATA, the IAWG and its members, observers and advisors are not rendering accounting, legal or other professional services in this publication. If accounting, legal advice or other expert assistance is required, the services of a competent professional should be sought. The paper addresses a specific issue related to the adoption of IFRS 15, Revenue from Contracts with Customers. This paper is not intended to provide accounting advice or a definitive analysis of the underlying issue as fact patterns, regulatory environment, practices and interpretations may vary. The views taken should not be used as a substitute for referring to the standards and interpretations of IFRS or professional advice from your auditor or other professional accounting advisor. The information contained in this publication is subject to constant review in the light of changing government requirements and regulations. No subscriber or other reader should act on the basis of any such information without referring to applicable laws and regulations and/or without taking appropriate professional advice. Although every effort has been made to ensure accuracy, the International Air Transport Association shall not be held responsible for any loss or damage caused by errors, omissions, misprints or misinterpretation of the contents hereof. -
IFRS 15 IFRS 15 Revenue from Contracts with Customers Is Issued
IFRS 15 IFRS 15 Revenue from Contracts with Customers is issued by the International Accounting Standards Board (the Board). IFRS Standards together with their accompanying documents are issued by the International Accounting Standards Board (the “Board”). Disclaimer: To the extent permitted by applicable law, the Board and the IFRS Foundation (Foundation) expressly disclaim all liability howsoever arising from this publication or any translation thereof whether in contract, tort or otherwise (including, but not limited to, liability for any negligent act or omission) to any person in respect of any claims or losses of any nature including direct, indirect, incidental or consequential loss, punitive damages, penalties or costs. Information contained in this publication does not constitute advice and should not be substituted for the services of an appropriately qualified professional. Copyright © IFRS Foundation All rights reserved. Reproduction and use rights are strictly limited. Contact the Foundation for further details at [email protected]. Copies of IASB publications may be obtained from the Foundation’s Publications Department. Please address publication and copyright matters to: IFRS Foundation Publications Department 30 Cannon Street, London, EC4M 6XH, United Kingdom. Tel: +44 (0)20 7332 2730 Fax: +44 (0)20 7332 2749 Email: [email protected] Web: www.ifrs.org The IFRS Foundation logo, the IASB logo, the IFRS for SMEs logo, the “Hexagon Device”, “IFRS Foundation”, “eIFRS”, “IAS”, “IASB”, “IFRS for SMEs”, “IASs”, “IFRS”, “IFRSs”, -
Distinguishing Between Securities Account and Deposit Accounts Under the UCC
As Appeared in the Illinois Bar Journal December, 2000, Volume 88 #12 Distinguishing Between Securities Account and Deposit Accounts Under the UCC By René Ghadimi, Katten Muchin Zavis Rosenman ©Reprinted with permission of the Illinois Bar Journal. Copyright by the Illinois State Bar Association, on the Web at <www.isba.org> Lenders frequently take security interests in the deposit accounts and securities accounts of their borrowers to secure the repayment of borrowers loan obligations. This article explores the basis for perfecting security interests in securities and deposit accounts and discusses the often important and sometimes elusive distinction between the two. The first step [in] determining how to perfect a lien is to decide whether a given account is a deposit or a securities account, as such terms are defined in the UCC in the relevant jurisdiction. Cash collateral accounts of one form or another are an important part of many finance transactions. These accounts may constitute significant assets of a borrower and can assume many forms, including operating accounts, capital subscription accounts, various types of reserve accounts and cash management accounts. These accounts may contain funds that are maintained overnight or for extended periods. More often than not, business realities dictate that the borrower be allowed to maintain some degree of control over the funds and invest them in financial assets rather than letting them languish as cash balances. The question for lenders who typically take a pledge of these accounts to secure the loan obligations of their borrower is how to perfect their security interest. These lenders must confront the issue of whether these various accounts are deposit accounts or securities accounts under the Uniform Commercial Code, or maybe a little of both. -
Accounting & Reporting of Financial Instruments 2016
Accounting & Reporting of Financial Instruments 2016 Illustration 1 (Exchange of Financial Liability at Unfavorable terms) A company borrowed `50 lacs @ 12% p.a. Tenure of the loan is 10 years. Interest is payable every year and the principal is repayable at the end of 10th year. The company defaulted in payment of interest for the year 4, 5 and 6. A loan reschedule agreement took place at the end of 7 year. As per the agreement the company is required to pay `90 lacs at the end of 8th year. Calculate the additional amount to be paid on account of rescheduling and also the book value of loan at the end of 8th year when reschedule agreement took place. Solution Assumption: Interest is compounded in case of default. Outstanding Amount at the end of 8th year = `50,00,000 x 1.12 x 1.12 x 1.12 x 1.12 x 1.12 = `88,11,708 (i.e. adding interest for 4th to 8th year) Rescheduled amount to be paid at the end of the 8th year = `90,00,000 Additional amount to be paid on rescheduling = `90,00,000 - `88,11,708 = `1,88,292. Illustration 2 Entity A holds an option to purchase equity shares in a listed entity B for `100 per share at the end of a 90 day period. Evaluate the contract whether a financial asset or a financial liability? What if the entity A has written the option? Solution The above call option gives entity A, a contractual right to exchange cash of `100 for an equity share in another entity and will be exercised if the market value of the share exceeds `100 at the end of the 90 day period. -
AC501 (M) MAY 20131 IDE AC501 (M) MAY 2013 Page 1 Of8 UNIVERSITY of SWAZILAND DEP ARTMENT of ACCOUNTING MAIN EXAMINATION PAPER, MAY 2013
AC501 (M) MAY 20131 IDE AC501 (M) MAY 2013 Page 1 of8 UNIVERSITY OF SWAZILAND DEP ARTMENT OF ACCOUNTING MAIN EXAMINATION PAPER, MAY 2013 DEGREEI DIPLOMA AND YEAR OF STUDY RCOMV TITLE OF PAPER FINANCIAL ACCOUNTING 1V COURSE CODE AC501 (M) MAY 2013 (Full-time) IDE AC501 (M) MAY 2013 (PART-TIME) TIME ALLOWED THREE (3) HOURS TOTAL MARKS 100 MARKS INSTRUCTIONS 1 There are four (4) questions on this paper. 2 Answer all four (4) questions. 2 Begin the solution to each question on a new page. 3 The marks awarded for a question are indicated at the end ofeach question. 4 Show the necessary working. 5 Calculations are to be made to zero decimal places of accuracy, unless otherwise instructed. Note: You are reminded that in assessing your work, account will be taken of accuracy of the language and general quality of expression, together with layout and presentation of your answer. SPECIAL REQUIREMENTS: CALCULATOR THIS PAPER IS NOT TO BE OPENED UNTIL PERMISSION HAS BEEN GRANTED BY THE INVIGILATOR OR SUPERVISOR. AC501 (M) MAY 20131 IDE AC501 (M) MAY 2013 Page 2 ofS QUESTION 1 . The Statement of financial position of Anstone Co, Yals Co and Zoo Co at 31 March 2012 are summarized as follows . • "L...""' .....,,··~.·cO : Non current assets Freehold property , Plant and machin~ry . 310,000 3,000 . Investment in subsidiaries Shares, at cost 110,000 6,~00 Loan account 3!f.iO() . Current accounts 10,000 12,200 120,000 22,200 Current assets Inventories 170,000 , .. , 15,()()() . Receivables 140,000 50,000 1,000 Cash at bank 60,000 4,000 370,000 20,000 800,000 289,200 23,000 Equity and liabilities EClui~y Ordinary share capital 200,000 10,000 Retained earnings 129,200 -1,000 579,600 229,200 ' . -
Earnings Per Share. the Two-Class Method Is an Earnings Allocation
Earnings Per Share. The two-class method is an earnings allocation formula that determines earnings per share for common stock and participating securities, according to dividends declared and participation rights in undistributed earnings. Under this method, net earnings is reduced by the amount of dividends declared in the current period for common shareholders and participating security holders. The remaining earnings or “undistributed earnings” are allocated between common stock and participating securities to the extent that each security may share in earnings as if all of the earnings for the period had been distributed. Once calculated, the earnings per common share is computed by dividing the net (loss) earnings attributable to common shareholders by the weighted average number of common shares outstanding during each year presented. Diluted (loss) earnings attributable to common shareholders per common share has been computed by dividing the net (loss) earnings attributable to common shareholders by the weighted average number of common shares outstanding plus the dilutive effect of options and restricted shares outstanding during the applicable periods computed using the treasury method. In cases where the Company has a net loss, no dilutive effect is shown as options and restricted stock become anti-dilutive. Fair Value of Financial Instruments. Disclosure of fair values is required for most on- and off-balance sheet financial instruments for which it is practicable to estimate that value. This disclosure requirement excludes certain financial instruments, such as trade receivables and payables when the carrying value approximates the fair value, employee benefit obligations, lease contracts, and all nonfinancial instruments, such as land, buildings, and equipment.