Study Session 5: Financial Reporting and Analysis: Intercorporate Investments, Post-Employment and Share Based Compensation, and Multinational Operations
For calculation of ratios such as return on assets/return on fixed assets, should I be using the end of period assets by default, or the average assets?
I am so unnecessarily confused on this – when do you use current vs temporal methods and which do GAAP / IFRS prefer?
I understand that you use current method when the subsidiary has autonomy and temporal when there is no autonomy. But then some problems specifically give you GAAP or IFRS – and I can’t find a definitive answer whether GAAP or IFRS in any way impacts which method to use. Can anyone help out?
My understanding is that whenever we restate for inflation under IFRS and then translate into the parent’s currency, we just multiply everything including the purchasing power gain or loss in the IS by the current exchange rate, so there would never be a CTA in stockholder’s equity on the parent’s balance sheet. Is this correct? Thank you!
Can someone explain how this will be classified in CFO and CFF:
Contribution of $500 and Total Pension Cost $600.
Thus, $100 x (1-0.3) = $70 after tax
Underfunded by $70 so will this be considered as borrowing? Thus CFF (outflow) will decrease by $70 and and CFO (inflow) will decrease by $70?
What if CFF had a net inflow? Then would the inflow have increased by $70?
Reading 17: Analysis of Financial Institutions
1. Why was a Tier I and a Tier II Capital structure created?
2. Taking an intuitive approach, what criterion/criteria should an item on the balance sheet fulfill to be put into either Tier I or Tier II?
3. Based on the criterion/criteria, why have allowance for loan losses been included in Tier II Capital?
4. In what real-life contexts will this classification prove useful? What are the practical applications?
If the fair value changes to $950, but the carrying value for yr 2 is $930, what should the interest income for yr 2 be calculated on, $930 or $950 for available for sale and held for trading securities?
Ok so I get the corridor approach and how it works. Essentially, the excess above 10% of either the obligation or FV of plan assets is amortized into P/L… But it’s not clear to me yet what actually goes into OCI.
For instance (000,s):
Pension Obligation 3800
FV plan assets 4200
Actuarial G/L 450
Corridor = 420 (10% X greater of PO or FV plan assets)
Amortize 30 over employee working lives..let’s say 10 yrs
P/L shows a 3K loss.
Now that IFRS 9 has been effective since Jan 1 2018, does this make IAS 39 irrelevant?
I really can’t see the point in learning about a redundant accounting standard; or am I being naive?
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