Professional Documents
Culture Documents
Receivables
Receivables represent claims for cash or other assets from
other entities. Examples:
- Accounts receivable-refers to amounts due from
customers arising from regular trade and business
transactions.
- Notes receivable - represents claims, usually with
interest, for debt, such as promissory notes.
- Loans receivable- used in the BTr-NG books
Government toto recognize loan extended by the
National or GOCCs, covered Government Financial
Institutions 'GFIs' receivable, agreements
- Other receivables, such as, interest receivable, due
from employees/officers/other NGAs, lease
receivables, dividends receivable, and the like.
Receivables are initially measured at fair value plus
transaction costs and subsequently measured at amortized
cost
Investments
Categories of Financial Assets
For purposes of subsequent measurement, financial assets
are classified as follows:
a. Financial asset at fair value through surplus or
deficit-is one that is either:
a. Held-for-trading, or
b. Designated as at fair value through surplus
or deficit on initial recognition. Any financial
asset can be classified in this category if its
fair value can be reliably measured. Illustration 3: Held-to-maturity investments
b. Held-to-maturity investments -are non-derivative
financial assets with fixed or determinable payments
and fixed máturity that an entity has the
positiveintention and ability to hold until maturity.
c. Loans and receivables-are non-derivative financial
assets with fixed or determinable payments and are
not quoted in an active market
d. Available for sale financial assets – are non-
derivative financial assets that are designated as
available for sale or are not classifiable under the
other categories
Summary of Measurements:
Derivatives
A derivative is a financial instrument or other contract
that derives its value from the changes in value of some
other underlying asset or other instrument.
Characteristics of a derivative
a. Its value changes in response to the change in an
underlying;
b. It requires no initial net investment (or only a very
minimal initial net investment);and
c. It is settled at a future date.
An "underlying" is a specified price, rate, or other variable
(e.g., interest rate, security or commodity price, foreign
exchange rate, index of prices or rates, etc.),including
scheduled event (e.g, a payment under contract) that may or
may not occur.
Purpose of a derivative
The very purpose of derivatives management. Risk
management is the process of identifying risk of risk is the
desired level the latter to equal identifying the actual level of
risk and altering the former
Hedging
Hedging is a method structuring of a transaction to
reduce risk involving financial instruments.
Hedge accounting recognizes the offsetting effects
on and surplus or deficit of changes in the fair values
of the hedging instrument and the hedged item.
Hedging Relationships
a. Fair value hedge -a hedge of the exposure to
changes in fair value of a recognized asset or liability
or an unrecognized firm commitment, or an
identified portion of such an asset, liability or firm