Professional Documents
Culture Documents
APPLICATIONS
David Chu
Richard Persaud
Jeffrey Rousset
Stephen Storey
Overview
• Current Value Accounting
• Financial Instruments
• 2007-2008 Market Meltdown
• Derivative Instruments
• Reporting on Risk
• Accounting for Intangibles
Current Value Accounting
• Value-in-Use
• Business Model
• Fair Value
• Exit price (opportunity cost)
• 3 Levels
Accounts Receivable & Payable
• Current accounts receivable
• Net of allowance for doubtful accounts
• Accounts payable
Differences:
• IAS 36
• FASB
Pensions and other Post-Employment Benefits
• Defined pension plans (IAS 19)
• Pension expense arising current period employee
service to include the change in the discounted present
value of expected future pension payments, including
for any future compensation increases.
a) Estimates
b) Reliability
c) None of the above
d) A and B
Answer
d) A and B
Question
• Which of the following classifications of financial
assets is not allowed in Canada, under the
current IAS 39.
• Available-for-Sale
• Loans and Receivables
• Held-to-Maturity
• Financial Assets at Fair Value through Profit and
Loss
• Mark-to-Market
Answer
• Mark-to-Market
Question
• What is a natural hedge?
Answer
• Some firms utilize a natural hedge, where they
hold financial assets and liabilities of similar
duration and other characteristics to offset their
impact on the firm
• From a business perspective, an increase in interest
rates decreases the fair value of a company’s interest
bearing assets, but also decreases the fair value of the
debt
Question
• Why cant standard setters demand that financial
assets are always measured at fair value?
Answer
• Fair value may not be reliable for certain
securities for which there is little or no market.
Issues also arise in regards to how intangibles
should be fair valued when valuing deposits at
financial institutions.
Question
• What are the two types of goodwill?
Answer
• Purchased
• Self-Developed
Question
• Is goodwill amortized?
Answer
• No, it is subject to the annual impairment test