FSA - Intercorporate investments is DAMN HARD

This for me is the hardest reading in the curriculum. I did the EOC 4 times over and still can’t get a good intuitive understanding of intercorporate investments. There’s so many things affecting, for example, equity under acquisition method - type of payment, how big a share is acquired, the amount of goodwill (full vs. partial). Not to mention the reclassification of minority passive investments. Fortunately, there aren’t a lot of questions that ask you to calculate the exact amount of equity. And I have seen just one or two that specifically require you to know the reclassification of minority passive inv. How did you guys learn this stuff? A lot of practice or do you just memorize the rules? Damn, have to get back to the books.

Its deceptively tricky; just like Pensions is deceptively easy. There are tonnes of ad-hoc rules with no intuitive sense behind them, and you have to memorize all of them.

This is my biggest confidence breaker. Imagine an ugly vignette with both intercorp. and multinational - combined - showing up on exam day. scares the * out of me…

Are you talking of the Non Controlling minority interest part? Where if a firm acquires 90%, but reports everything as if it has acquired 100% and then introduces this non controlling minority interest line in Equity (which again differs based on what goodwill method is used)? Or is this minority passive interest something else? Never came across this term! And yeah, All the three major topics in FSA sucks!

Common_Sense Wrote: ------------------------------------------------------- > This is my biggest confidence breaker. Imagine an > ugly vignette with both intercorp. and > multinational - combined - showing up on exam > day. > > scares the * out of me… Well that would be a lot better than a vignette of intercorporate investments and another vignette of multinational.

this may help a little http://www.analystforum.com/phorums/read.php?12,1153503,1153751#msg-1153751

rpradeephere Wrote: ------------------------------------------------------- > Are you talking of the Non Controlling minority > interest part? > > Where if a firm acquires 90%, but reports > everything as if it has acquired 100% and then > introduces this non controlling minority interest > line in Equity (which again differs based on what > goodwill method is used)? > > Or is this minority passive interest something > else? Never came across this term! > > And yeah, All the three major topics in FSA sucks! Yes that part of equity - the non controlling interest that depends on the the amount owned and also on the goodwill method. Also don’t forget to add the amount of equity if paid by stock of the acquirer or deduct the amount of cash if paid by $$. Minority passive investments - no significant influence investments - you know - held for trading, available for sale, etc. These have some rules for reclassification between the asset classes and also for impairment. Impossible for me to learn…

Did you come across questions in those areas in mocks/exams? I thought it is not required to go into such detail. It seems impossible to learn! :frowning:

I recall some schweser practice exams having questions on reclassification of minority passive investments (financial assests), but not too many. And that’s good. Equity under all the methods, on the other hand, is heavily tested and is surely something you don’t want to miss out on.

Common_Sense Wrote: >This is my biggest confidence breaker. Imagine an ugly vignette with both intercorp. and >multinational - combined - showing up on exam day. >scares the * out of me… ------------------------------------------------------------ Unfortunately I no longer have to imagine something like that happening on exam day (sigh)

You’ll get it. Don’t just read EOC, read back through the actual material and do the in-text problems (if there are any for that section). You’ll be fine, just keep grinding. There are people who won’t start studying until late Jan/early Feb until after the wait for LI results. Just stay focused on the goal.

read it a couple times…wait a day…think about it…read it again…slowly word for word…it’ll come to you.

marco_m Wrote: ------------------------------------------------------- > read it a couple times…wait a day…think about > it…read it again…slowly word for word…it’ll > come to you. Good advice. I read this section maybe 10 times over the course of studying six months or so. I kept going back to it on occasion after occasion. Don’t get bogged down, frustrated or worried. It’s not all as bad as this. Keep your interest in studying up and keep progressing.

John Harris.

the best way is to do questions. The EOC questions are great.

two words - John Harris

Don’t worry about IC Investments. Read it a couple of times, it’ll start coming into your head. Same for pension accounting, which needs slightly more time than the former. Multinational accounting is the biggest thing and it’s tough. There’s limited stuff in Multinational accounting but it’s tough. There’ s a lot of stuff in the 2nd and 3rd chapters, but it’s easy. And don’t worry, most vignettes on the Paper will be standalone, esp in FRA; because the chapters aren’t interrelated. The strategy for Intercorporate & Pension accounting I suggest is - Get the big picture right, then jump into the details of the chapters. MOST IMPORTANTLY, *** FRA IS THE KEY TO SUCCEED IN L-2 *** It’s good you guys are jumping into this early.

RahulMulchandani Wrote: ------------------------------------------------------- > > And don’t worry, most vignettes on the Paper will > be standalone, esp in FRA; because the chapters > aren’t interrelated. > Are you sure about this? What about a multinational company that has one of its international branches make a significant investment in another company that has a huge defined benefits pension scheme?

Welcome to L2.

me.tega Wrote: ------------------------------------------------------- > RahulMulchandani Wrote: > -------------------------------------------------- > ----- > > > > And don’t worry, most vignettes on the Paper > will > > be standalone, esp in FRA; because the chapters > > aren’t interrelated. > > > > Are you sure about this? What about a > multinational company that has one of its > international branches make a significant > investment in another company that has a huge > defined benefits pension scheme? It happens in real life, but don’t expect that to happen on the L-2 exam… If you wanna take a contrarian view, go ahead; but you’ll waste your time & energy.