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

financial reporting

dear all,

can someone explain why with the Equity method when we have to calculate the value of the investment at year end (same year when the acquirer has bought lets say 32% of a company and has significant influence) we are doing the following:

Value of investment at year end = Initial investment +%*Associate NI - %*dividends paid by Associate - Amortization of excess amount paid for PP&E. Should I consider the Amortization of excess amount paid for PP&E like an expense that decrease the NI?


Adjusted cash flows - pension

When contribution > TPPC, it is similar to repayment of a loan. Since that’s an outflow we add the amount to CFF. It would mean increase in CFO, so we add the amount. 

How would the reverse treatment be? 

When TPPC > Contribution, and we are ‘borrowing’ would it mean an inflow and so we adjust CFF by subtracting the amount? And what about CFO? 

Total Cash Outflow Related to Post-Employment Costs

If you are asked to calculate the total cash outflow related to post-employment costs with a defined benefit plan and a health care plan. What do you include? (Company uses IFRS)

P.S Good luck for the last week!


How would you go about calculating the periodic pension cost and the change in OCI for the below? THe mock solution doesn’t really make sense to me.

Beg benefit obligation     635

Plans assets beg.           592

Contributions                   84

Payments to retirees.   38

Past service costs         0

Current service costs    94

Actuarial gain due to change in assumptions 51

Actual return on plan assets 57

Discount rate.             8%

Expected Return on assets 10%

CAGR for Annual Sales Growth

One of the practice questions in Schweser volume two is asking will the annual revenue growth rate will be higher before or after translation, these are the three years and translation rate:

Revenue:                  2014   2015   2016

                                765        820     870

Cumulative Translation

Once you translate your BS and IS using the temporal method, how do you know whether you have a net asset exposure or a net liability exposure? 

Call on Futures

Could you guys pls explain based on what formula is this expression?

The value of a call option on futures is equal to the value of a portfolio with a long bond position and a short futures position.

Indemnification Asset

Can someone please explain what indemnification assets are? and what’s there accounting treatment. TIA


Hi to all of you,

I am little ashamed to ask this question 15 days before the final date but I do not understand what remeasurement really means.

A simple equation would help. If an explanation comes with I would be glad to read it.


I am french and and a french humorist (sorry for my poor english) said : « we were all born equal but some are more equal than others ».

Thank you for your sympathy.