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Study Session 5: Financial Reporting and Analysis: Intercorporate Investments, Post-Employment and Share Based Compensation, and Multinational Operations

Translation methods: which historical rate to use?

When using historical rates, which one do you use when there’s a half year? Is it the start of year historical rate when using temporal? For income statement, when using average rates, do you use the average from when you acquired the company (if acquired mid-year), or the average for calendar year, or average of fiscal year? 

2019 Mock (AM) - Trana Case Scenario

Just a quick thread to vent a little. Holy crap this vignette is hard - I’ve been stuck on the first question for over 10 minutes now, perhaps I’m just tired but can’t even seem to wrap my head around what the question is even asking me to do! Has anybody else found this one to be of next level difficulty? Please tell me I’m not the only one - this is demoralising! Haha. If the actual exam is anything like this I reckon I’ll just have to punt FRA entirely. 

fra doubt

some of adam’s equpment is leased, annual (eoy) lease payments are eur 10 mil for the next 6 years ( including 12-31-18 pmt) and the avg interest rate on the leases is 6.4% . to make financial  statements comparable with the rest, analyst B adjusts them by replacing the operating leases with financial leases as of 1/1/2018 , he assumes leased equipment has zero salvage value.

other given data : total assets 2018: 856,750 ; ebt: 23150 ; income taxes : 7000; int income : 20000 ; ebit 43150

Periodic pension cost

Hi guys,

I`m struggling with periodic pension cost calculations and formula and have the following question.

When looking gto the TPPC formula which is total periodic pension cost formula we have:

current service cost + interest cost - actual return on plan assets (+/-) actuarial gains/losses  + prior service cost

Basel III Tier 1 and Tier 2 Capital

On Tier 1 and Tier 2 capital, would these be equity and liability accounts for a bank?

For example, Tier 2 capital (sub instruments with original maturity >5 years) would be sub debt issued by the bank, and therefore is a liability on the bank’s balance sheet and a source of cash; it would not be sub debt assets that were purchased by the bank.

My intuition is that you can’t use assets to fund RWA - it would have to be from the other side of the balance sheet. Am I thinking about this correctly?

doubt in fra question

can someone explain the adjustments needed for retained earning and current assets when the effect of acquiring a company is removed? 

Adding back receivables from SPE

In one of the mocks, Company A sold and securitized finance receivables in a SPE. The question asked what would be the effect of adding back the receivables on its leverage ratios. The answers shows that assets and liabilities increased by the same amount of the receivables…why would this be the case? Shouldn’t receivables only increase assets, and not liabilities?