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  • Accounting Cheat Code Complete

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    mai
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    The document outlines different cost models and fair value measurements for financial assets. It compares the historical cost model to the fair value model and notes two tests - the contractual cash flow characteristics test and business model test - that are used to determine if a financial asset should be measured at amortized cost, fair value through other comprehensive income, or fair value through profit or loss. The tests are applied to determine the appropriate accounting treatment for bonds, stocks, and other financial instruments depending on whether they are held for long-term or short-term purposes.

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    The document outlines different cost models and fair value measurements for financial assets. It compares the historical cost model to the fair value model and notes two tests - the contractual cash flow characteristics test and business model test - that are used to determine if a financial asset should be measured at amortized cost, fair value through other comprehensive income, or fair value through profit or loss. The tests are applied to determine the appropriate accounting treatment for bonds, stocks, and other financial instruments depending on whether they are held for long-term or short-term purposes.

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    © All Rights Reserved
    Download as PDF, TXT or read online from Scribd
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    6 views2 pages

    Accounting Cheat Code Complete

    Uploaded by

    mai
    The document outlines different cost models and fair value measurements for financial assets. It compares the historical cost model to the fair value model and notes two tests - the contractual cash flow characteristics test and business model test - that are used to determine if a financial asset should be measured at amortized cost, fair value through other comprehensive income, or fair value through profit or loss. The tests are applied to determine the appropriate accounting treatment for bonds, stocks, and other financial instruments depending on whether they are held for long-term or short-term purposes.

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    © All Rights Reserved
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    of 2

    1 Cost model: Fair Value:

    Historical cost Amount of IP Market


    - Depreciatn V price
    2 1. Contractual Cash
    flow CCF test Long term (5 yrs)
    Amortization
    Cost
    FVTPL sample
    3
    Bond Semi-Long term (2 yrs) FVOCI
    Is this a Purpose-
    Income Income
    Bond? short
    - Depreciation + Gain on property FVTPL
    stock Long term (5 yrs) →
    Purpose- FVOCI
    Short → FVTPL
    2. BM model
    test
    Bond Amortization
    No amortization in stocks

    This is
    unrealize
    gain
    IS = interest in Bond
    IS = cash IS = RE

    Low dep. = high profit


    6

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