This document discusses how accounting books can be engineered to the advantage of shareholders under accounting regulations like FASB and IFRS. It provides an example of how goodwill and intangible assets are treated differently under FASB 142 compared to previous rules. Financial engineering techniques can structure statements to maximize reported earnings through interpretations of accounting rules that are legal and aim to benefit the corporation. The document also discusses challenges in valuing intangible assets and provides a demonstration of the effect of FAS 142 on a company's balance sheet through an example.
Financial engineering involves designing innovative financial instruments and processes to solve problems in finance. It applies theoretical finance and modeling to make pricing, hedging, and portfolio management decisions. Financial engineers bundle and unbundle securities to maximize profits using various assets. They are prepared for careers in areas like money and banking, corporate finance, investments, and financial markets.
Financial engineering involves the design and implementation of innovative financial products and processes. It deals with creating new financial instruments or repackaging existing ones. Some examples of financial engineering in India include debt-oriented mutual funds, interest rate futures, and floating rate bonds. Financial engineering can be applied to equity, debt, hybrid instruments, and derivatives. It is used by investment banks and for purposes like risk management, valuation, and portfolio management. The field needs further development to provide more choices for investors and corporations to improve financial efficiency and solutions.
Financial engineering involves the design, development, and implementation of innovative financial instruments and processes to creatively address problems in finance. It refers specifically to bundling and unbundling securities to maximize profits using various asset combinations, applying theoretical finance and computer modeling. Financial engineering relies on tools from fields like computational intelligence, mathematical finance, and computer simulation for trading, hedging, investment decisions, and risk management. In contrast, financial analysis assesses the viability, stability, and profitability of a business by professionals through evaluation of financial statements and market conditions.
Roles for Financial Engineering In the Life Insurance IndustryFrank Zhang
Roles for Financial Engineering in the Life Insurance Industry
[1] Life insurance products are increasingly derivatives oriented and many of the same derivatives valuation techniques apply. [2] The hybrid products also create unique challenges and opportunities to financial engineers and derivative markets. [3] Quantitative research and stochastic model development are needed to address pricing of guarantees, hedging strategies, and dynamic policyholder behavior modeling.
This slides deals with financial engineering. It is an innovative financial service. it also deals with different financial services rendered by the forex and domestic market.
Financial engineering is the quantitative methodology used for development of solutions to financial problems. It is often used for development of new financial products, such as an existing basket of vanilla financial products, or combining features of different financial products in a hybrid financial product, in order to enhance the yield or changing the risk aspects of the new product in accordance with the views of the client. The presentation on financial engineering and structured products is a presentation made at a conference regarding the products that have the unique feature of preserving the initial investment or a portion of initial investment along with the potential of increasing the yield of the investment.
This document discusses financial engineering. Financial engineering involves designing innovative financial instruments and processes to solve problems in finance. It uses tools from various fields like mathematics, economics, and accounting. Financial engineers work in teams and combine elements like forwards, futures, options, and swaps to create customized financial instruments that meet clients' needs, such as hedging unique risks. Factors driving the growth of financial engineering include increased volatility, competition, and technological advances, as well as firms' own needs around liquidity, risk management, and accounting.
This document discusses various types of financial assets and instruments. It begins by defining real assets as tangible items and financial assets as promises to distribute future cash flows. It then lists and describes various short-term and long-term debt instruments, as well as equity instruments like preferred and common stock. Derivatives, which derive their value from underlying assets, are also covered. The document considers factors in choosing different financial instruments from both issuer and investor perspectives.
Financial engineering involves designing innovative financial instruments and processes to solve problems in finance. It applies theoretical finance and modeling to make pricing, hedging, and portfolio management decisions. Financial engineers bundle and unbundle securities to maximize profits using various assets. They are prepared for careers in areas like money and banking, corporate finance, investments, and financial markets.
Financial engineering involves the design and implementation of innovative financial products and processes. It deals with creating new financial instruments or repackaging existing ones. Some examples of financial engineering in India include debt-oriented mutual funds, interest rate futures, and floating rate bonds. Financial engineering can be applied to equity, debt, hybrid instruments, and derivatives. It is used by investment banks and for purposes like risk management, valuation, and portfolio management. The field needs further development to provide more choices for investors and corporations to improve financial efficiency and solutions.
Financial engineering involves the design, development, and implementation of innovative financial instruments and processes to creatively address problems in finance. It refers specifically to bundling and unbundling securities to maximize profits using various asset combinations, applying theoretical finance and computer modeling. Financial engineering relies on tools from fields like computational intelligence, mathematical finance, and computer simulation for trading, hedging, investment decisions, and risk management. In contrast, financial analysis assesses the viability, stability, and profitability of a business by professionals through evaluation of financial statements and market conditions.
Roles for Financial Engineering In the Life Insurance IndustryFrank Zhang
Roles for Financial Engineering in the Life Insurance Industry
[1] Life insurance products are increasingly derivatives oriented and many of the same derivatives valuation techniques apply. [2] The hybrid products also create unique challenges and opportunities to financial engineers and derivative markets. [3] Quantitative research and stochastic model development are needed to address pricing of guarantees, hedging strategies, and dynamic policyholder behavior modeling.
This slides deals with financial engineering. It is an innovative financial service. it also deals with different financial services rendered by the forex and domestic market.
Financial engineering is the quantitative methodology used for development of solutions to financial problems. It is often used for development of new financial products, such as an existing basket of vanilla financial products, or combining features of different financial products in a hybrid financial product, in order to enhance the yield or changing the risk aspects of the new product in accordance with the views of the client. The presentation on financial engineering and structured products is a presentation made at a conference regarding the products that have the unique feature of preserving the initial investment or a portion of initial investment along with the potential of increasing the yield of the investment.
This document discusses financial engineering. Financial engineering involves designing innovative financial instruments and processes to solve problems in finance. It uses tools from various fields like mathematics, economics, and accounting. Financial engineers work in teams and combine elements like forwards, futures, options, and swaps to create customized financial instruments that meet clients' needs, such as hedging unique risks. Factors driving the growth of financial engineering include increased volatility, competition, and technological advances, as well as firms' own needs around liquidity, risk management, and accounting.
This document discusses various types of financial assets and instruments. It begins by defining real assets as tangible items and financial assets as promises to distribute future cash flows. It then lists and describes various short-term and long-term debt instruments, as well as equity instruments like preferred and common stock. Derivatives, which derive their value from underlying assets, are also covered. The document considers factors in choosing different financial instruments from both issuer and investor perspectives.
This document summarizes various money market instruments and investment avenues. It discusses traditional money market instruments like treasury bills, certificates of deposit, and commercial paper. It also discusses modern money market instruments like repo instruments, money market mutual funds, and inter-corporate deposits. Equity investments discussed include stocks, limited partnerships, private placements, and American/global depository receipts. Preferred stocks and hybrid securities are also summarized. Real estate investments are noted to provide capital appreciation, income from rents, and tax benefits.
In today’s digital era, on average, people have the attention span of a goldfish: that’s why it’s important to get to the point, correctly and succinctly. Take a look at our financial glossary for a vocabulary boost.
This document discusses various short, medium, and long term sources of finance for businesses. It outlines sources such as equity, debt, retained earnings, loans, and venture capital as owned capital. Medium term sources include preference shares, debentures, bonds, and lease financing. Short term sources include trade credit, working capital loans, fixed deposits, and bill discounting. The document emphasizes that businesses should choose financing sources based on costs and benefits.
The document organizes various methods for investing financial assets into direct investing, indirect investing, and different asset classes. Direct investing involves individuals purchasing securities directly, while indirect investing involves purchasing shares of investment companies that hold portfolios of securities. The document further breaks down the different asset classes an investor may choose from, including money market securities, fixed income securities, equity securities, and derivative securities.
Investment Analysis and Portfolio ManagementBabasab Patil
This document summarizes key points about investment analysis and portfolio management. It discusses the module website resources, gains and losses from past investments, markets and security types, brokers, returns and risks, and the investment process. The essential topics covered are types of markets and securities, factors that influence investment returns and risks, and the basic steps in analyzing investments and constructing a portfolio.
This document defines and provides examples of different types of investments including stocks, bonds, mutual funds, real estate, and precious metals and stones. It discusses initial public offerings (IPO) which allow private companies to offer stock to the public. It also defines shares, bonds, debentures, fixed deposits, mutual funds, provident funds, and insurance as examples of financial instruments. Real estate investments can include residential homes, agricultural land, and commercial property. Precious objects for investment purposes include gold, silver, and precious stones. The document also presents the basic formula for personal finance that income minus expenditure equals savings.
The document discusses various types of risks associated with bonds, including default risk, credit spread risk, and downgrade risk. It then provides information on analyzing bonds and issuers, including sources of default risk information, the four Cs of credit analysis (character, covenants, collateral, capacity), factors for evaluating capacity and financial position, using ratios in credit analysis, and cash flow and leverage ratios used by ratings agencies. The document also discusses analyzing specific types of bonds and issuers.
noorulhadi Lecturer at Govt College of Management Sciences, noorulhadi99@yahoo.com
i have prepared these slides and still using in mylectures, Reference: Portfolio management by S kevin and onlin
This document provides information on various sources of finance including venture capital, retained earnings, equity shares, preference shares, deep discount bonds, certificates of deposit, trade credit, debentures, and commercial paper. It defines each type of financing, describes their key features and terms, and notes some advantages and disadvantages. Venture capital finances startups and risky businesses. Retained earnings come from profits not paid as dividends. Equity and preference shares represent different types of company ownership. Deep discount bonds pay no interest until maturity.
The document provides definitions for various terms related to mutual funds. Some key terms defined include net asset value (NAV), load funds, no-load funds, open-ended funds, closed-ended funds, equity funds, and debt funds. It also defines related financial terms like assets, liabilities, capital gains, dividends, and expense ratio among others.
Working Capital and Sources of Short-Term FundAvone Lumanao
The document discusses the financing policy and sources of working capital for firms. It defines working capital and explains why it is important for companies. It identifies three approaches to financing working capital: conservative, maturity matching, and aggressive. It also discusses how Philippine firms finance working capital and the sources of short-term funds available, including bank loans, trade financing, and receivable factoring. The key aspects are determining the appropriate financing strategy for a firm's working capital needs and the various short-term sources available, particularly bank loans.
Derivatives are financial contracts whose value is dependent on an underlying asset. Common types of derivatives include forwards, futures, options, and swaps. Derivatives can be used to hedge risk, speculate on asset prices, or gain leverage. While derivatives provide benefits like hedging and market efficiency, they also carry high risks like counterparty risk and can enable speculation. Corporate finance deals with capital investment, financing, and liquidity management decisions to maximize shareholder value and profits. This includes capital budgeting, sourcing debt or equity, and ensuring sufficient working capital and cash flows.
This document discusses various types of financial instruments, including capital market instruments like equity shares and preference shares, as well as money market instruments. Equity shares represent ownership in a company and give shareholders voting rights and a claim on residual assets. Preference shares have preferential rights to dividends and repayment of capital. The document also covers debentures, bonds, derivatives and money market instruments like treasury bills, certificates of deposit, commercial paper, repurchase agreements, and banker's acceptances.
The document discusses various investment alternatives available to investors. It covers financial investments such as mutual funds, bonds, stocks, deposits etc. It also discusses non-financial investments such as real estate and precious metals. Specific government saving schemes like post office deposits, public provident fund etc. are explained. Money market instruments and their types including treasury bills, commercial paper and repos are defined. Key features of bonds, stocks and mutual funds are highlighted. Insurance products and retirement plans are also summarized.
The document discusses key concepts for investment analysis and project selection, including:
1) Projects should yield a return greater than the minimum hurdle rate, which is higher for riskier projects. Returns should consider cash flows, timing, and side effects.
2) The optimal financing mix minimizes the hurdle rate and matches the assets financed.
3) If not enough high-returning investments exist, excess cash should be returned to stockholders.
Financial needs & sources of finance of a part 1Ajit Dahal
The document discusses the different financial needs and sources of finance for businesses over short, medium, and long term periods. It outlines that long term needs are for fixed assets and the sources include issuing shares, debentures, loans, and reinvesting profits. Medium term needs are for activities like building renovations and sources involve preference shares, debentures, public deposits, and financial institutions. Short term needs are for working capital and sources include bank loans, trade credit, and customer advances. The document then provides further details on various long term sources of finance for businesses.
This document provides definitions for various financial terms beginning with A through E. Some key terms defined include:
- Accretion/Dilution Analysis - Determines the impact of an M&A or capital markets transaction on a company's projected EPS.
- Agent - The bank responsible for administering a project's financing.
- Analyst - Entry level position in an investment bank, typically filled by graduates for 2-3 years until promotion to Associate.
- Arranger - A bank responsible for originating and syndicating a loan transaction, often having a senior role and largest share.
- Asset Class Breakdown - Percentage of holdings in different investment types like stocks, bonds, etc.
SFAC documents are issued by the FASB to provide broad accounting concepts and definitions that serve as a framework for establishing financial accounting standards. SFAC No. 1 discusses the objectives of financial reporting for business enterprises as providing useful information for economic decision making. SFAC No. 2 addresses the qualitative characteristics of accounting information such as relevance, reliability, and neutrality. SFAC No. 5 and 7 provide guidance on recognition criteria, measurement attributes, and using present value and cash flow information in financial statements.
The IASB has published a Discussion Paper proposing changes to how financial instruments are classified as equity or liabilities. The key proposals are:
1. Financial instruments would be classified as liabilities if they contain an unavoidable obligation to transfer economic resources at a specified time or in an amount independent of the entity's resources.
2. Derivatives over own equity would be classified entirely as assets/liabilities based on their cash settlement requirements and whether payments are tied to the entity's resources.
3. Enhanced presentation would distinguish liabilities with equity-like returns from other liabilities and disaggregate equity between ordinary shares and other instruments.
4. Expanded disclosure would provide information on instrument
Intermediate Accounting Volume 2 Canadian 11th Edition Kieso Test BankBentonner
Full download : https://alibabadownload.com/product/intermediate-accounting-volume-2-canadian-11th-edition-kieso-test-bank/ Intermediate Accounting Volume 2 Canadian 11th Edition Kieso Test Bank
This document summarizes various money market instruments and investment avenues. It discusses traditional money market instruments like treasury bills, certificates of deposit, and commercial paper. It also discusses modern money market instruments like repo instruments, money market mutual funds, and inter-corporate deposits. Equity investments discussed include stocks, limited partnerships, private placements, and American/global depository receipts. Preferred stocks and hybrid securities are also summarized. Real estate investments are noted to provide capital appreciation, income from rents, and tax benefits.
In today’s digital era, on average, people have the attention span of a goldfish: that’s why it’s important to get to the point, correctly and succinctly. Take a look at our financial glossary for a vocabulary boost.
This document discusses various short, medium, and long term sources of finance for businesses. It outlines sources such as equity, debt, retained earnings, loans, and venture capital as owned capital. Medium term sources include preference shares, debentures, bonds, and lease financing. Short term sources include trade credit, working capital loans, fixed deposits, and bill discounting. The document emphasizes that businesses should choose financing sources based on costs and benefits.
The document organizes various methods for investing financial assets into direct investing, indirect investing, and different asset classes. Direct investing involves individuals purchasing securities directly, while indirect investing involves purchasing shares of investment companies that hold portfolios of securities. The document further breaks down the different asset classes an investor may choose from, including money market securities, fixed income securities, equity securities, and derivative securities.
Investment Analysis and Portfolio ManagementBabasab Patil
This document summarizes key points about investment analysis and portfolio management. It discusses the module website resources, gains and losses from past investments, markets and security types, brokers, returns and risks, and the investment process. The essential topics covered are types of markets and securities, factors that influence investment returns and risks, and the basic steps in analyzing investments and constructing a portfolio.
This document defines and provides examples of different types of investments including stocks, bonds, mutual funds, real estate, and precious metals and stones. It discusses initial public offerings (IPO) which allow private companies to offer stock to the public. It also defines shares, bonds, debentures, fixed deposits, mutual funds, provident funds, and insurance as examples of financial instruments. Real estate investments can include residential homes, agricultural land, and commercial property. Precious objects for investment purposes include gold, silver, and precious stones. The document also presents the basic formula for personal finance that income minus expenditure equals savings.
The document discusses various types of risks associated with bonds, including default risk, credit spread risk, and downgrade risk. It then provides information on analyzing bonds and issuers, including sources of default risk information, the four Cs of credit analysis (character, covenants, collateral, capacity), factors for evaluating capacity and financial position, using ratios in credit analysis, and cash flow and leverage ratios used by ratings agencies. The document also discusses analyzing specific types of bonds and issuers.
noorulhadi Lecturer at Govt College of Management Sciences, noorulhadi99@yahoo.com
i have prepared these slides and still using in mylectures, Reference: Portfolio management by S kevin and onlin
This document provides information on various sources of finance including venture capital, retained earnings, equity shares, preference shares, deep discount bonds, certificates of deposit, trade credit, debentures, and commercial paper. It defines each type of financing, describes their key features and terms, and notes some advantages and disadvantages. Venture capital finances startups and risky businesses. Retained earnings come from profits not paid as dividends. Equity and preference shares represent different types of company ownership. Deep discount bonds pay no interest until maturity.
The document provides definitions for various terms related to mutual funds. Some key terms defined include net asset value (NAV), load funds, no-load funds, open-ended funds, closed-ended funds, equity funds, and debt funds. It also defines related financial terms like assets, liabilities, capital gains, dividends, and expense ratio among others.
Working Capital and Sources of Short-Term FundAvone Lumanao
The document discusses the financing policy and sources of working capital for firms. It defines working capital and explains why it is important for companies. It identifies three approaches to financing working capital: conservative, maturity matching, and aggressive. It also discusses how Philippine firms finance working capital and the sources of short-term funds available, including bank loans, trade financing, and receivable factoring. The key aspects are determining the appropriate financing strategy for a firm's working capital needs and the various short-term sources available, particularly bank loans.
Derivatives are financial contracts whose value is dependent on an underlying asset. Common types of derivatives include forwards, futures, options, and swaps. Derivatives can be used to hedge risk, speculate on asset prices, or gain leverage. While derivatives provide benefits like hedging and market efficiency, they also carry high risks like counterparty risk and can enable speculation. Corporate finance deals with capital investment, financing, and liquidity management decisions to maximize shareholder value and profits. This includes capital budgeting, sourcing debt or equity, and ensuring sufficient working capital and cash flows.
This document discusses various types of financial instruments, including capital market instruments like equity shares and preference shares, as well as money market instruments. Equity shares represent ownership in a company and give shareholders voting rights and a claim on residual assets. Preference shares have preferential rights to dividends and repayment of capital. The document also covers debentures, bonds, derivatives and money market instruments like treasury bills, certificates of deposit, commercial paper, repurchase agreements, and banker's acceptances.
The document discusses various investment alternatives available to investors. It covers financial investments such as mutual funds, bonds, stocks, deposits etc. It also discusses non-financial investments such as real estate and precious metals. Specific government saving schemes like post office deposits, public provident fund etc. are explained. Money market instruments and their types including treasury bills, commercial paper and repos are defined. Key features of bonds, stocks and mutual funds are highlighted. Insurance products and retirement plans are also summarized.
The document discusses key concepts for investment analysis and project selection, including:
1) Projects should yield a return greater than the minimum hurdle rate, which is higher for riskier projects. Returns should consider cash flows, timing, and side effects.
2) The optimal financing mix minimizes the hurdle rate and matches the assets financed.
3) If not enough high-returning investments exist, excess cash should be returned to stockholders.
Financial needs & sources of finance of a part 1Ajit Dahal
The document discusses the different financial needs and sources of finance for businesses over short, medium, and long term periods. It outlines that long term needs are for fixed assets and the sources include issuing shares, debentures, loans, and reinvesting profits. Medium term needs are for activities like building renovations and sources involve preference shares, debentures, public deposits, and financial institutions. Short term needs are for working capital and sources include bank loans, trade credit, and customer advances. The document then provides further details on various long term sources of finance for businesses.
This document provides definitions for various financial terms beginning with A through E. Some key terms defined include:
- Accretion/Dilution Analysis - Determines the impact of an M&A or capital markets transaction on a company's projected EPS.
- Agent - The bank responsible for administering a project's financing.
- Analyst - Entry level position in an investment bank, typically filled by graduates for 2-3 years until promotion to Associate.
- Arranger - A bank responsible for originating and syndicating a loan transaction, often having a senior role and largest share.
- Asset Class Breakdown - Percentage of holdings in different investment types like stocks, bonds, etc.
SFAC documents are issued by the FASB to provide broad accounting concepts and definitions that serve as a framework for establishing financial accounting standards. SFAC No. 1 discusses the objectives of financial reporting for business enterprises as providing useful information for economic decision making. SFAC No. 2 addresses the qualitative characteristics of accounting information such as relevance, reliability, and neutrality. SFAC No. 5 and 7 provide guidance on recognition criteria, measurement attributes, and using present value and cash flow information in financial statements.
The IASB has published a Discussion Paper proposing changes to how financial instruments are classified as equity or liabilities. The key proposals are:
1. Financial instruments would be classified as liabilities if they contain an unavoidable obligation to transfer economic resources at a specified time or in an amount independent of the entity's resources.
2. Derivatives over own equity would be classified entirely as assets/liabilities based on their cash settlement requirements and whether payments are tied to the entity's resources.
3. Enhanced presentation would distinguish liabilities with equity-like returns from other liabilities and disaggregate equity between ordinary shares and other instruments.
4. Expanded disclosure would provide information on instrument
Intermediate Accounting Volume 2 Canadian 11th Edition Kieso Test BankBentonner
Full download : https://alibabadownload.com/product/intermediate-accounting-volume-2-canadian-11th-edition-kieso-test-bank/ Intermediate Accounting Volume 2 Canadian 11th Edition Kieso Test Bank
This document provides an overview of key accounting concepts and requirements under International Financial Reporting Standards (IFRS) and US Generally Accepted Accounting Principles (GAAP). It discusses regulatory bodies that establish accounting standards, classification of assets and liabilities, requirements for balance sheets and income statements, and accounting for topics such as business combinations, foreign currency translation, and interim financial reporting. The document is intended to help readers understand the main differences between IFRS and US GAAP and ensure compliance with relevant standards.
Point of view: The financial reporting framework - Could changes to the not-f...PwC
The document discusses potential changes to financial reporting standards that may impact both non-profit and for-profit entities. The FASB has proposed changes to non-profit financial reporting and has research projects underway on for-profit performance reporting and cash flows. The changes to non-profit standards may influence the direction of the for-profit projects. For-profit entities are encouraged to comment on areas of the non-profit proposal that intersect with the for-profit research to help the FASB maintain consistency across reporting models.
6.3 Substance over form is a recipe for failing to achieve compar.docxalinainglis
6.3 “Substance over form is a recipe for failing to achieve comparability between financial statements of different enterprises.” Discuss.
ANSWER 1:
Substance over form is an accounting principle, which ensures the relevant and true picture of the transactions in the financial statements of the entity. It is an accounting concept, where items are accounted according to their economic reality and substance, rather than focusing merely on the legal aspects of transactions. The key point is to highlight the transactions should not be recorded in order to hide the intention behind the transaction.
However, this recipe fails to compare the financial statements of different enterprises, as in some cases, it is difficult to identify the intent behind the transaction and the substance linked to the transaction, hence the difference, in how to present the transaction can lead to various results. For example: For a company, say X, the intent over creation of an asset or a liability is not identified, based on the benefits and obligations attached to it. Hence, a problem arises, which gives different results in different situations.
ANSWER 2:
Financial information is irrelevant unless it can be compared across periods and companies. This requires that any changes should be disclosed.
It is important that financial statements released by enterprises have similar and consistent form. It is not just about what numbers you have on the statements, but also how the statements are constructed.
6.4 Explain why it is necessary to define either “asset” or “expense” from first principles, but not both. Why has the IASB chosen to define the former?
It is important to define either asset or expense from first principles because you must understand weather to use the matching concept ort the revenue principle. The IASB chooses to use the second way of defining the elements because it has the effect of reducing the importance of the matching concept.
6.5 Is it necessary and useful to have different valuation bases for different assets?
Yes, it is necessary and useful to have different valuation bases for different assets. The different valuations can be used for differing classes of assets. Such as intangible fixed assets, tangible assets, biological assets, etc. Depending on the classification of the asset, an appropriate means of valuation, depreciation (and impairment if applicable) can be applied to the asset.
6.7 “In recent years, the IASB has clearly been moving towards the use of current values rather than historical costs.” Discuss.
Under the historical cost doctrine, assets are generally carried on the balance sheet at their acquisition cost and liabilities are usually carried at the prices at which they were incurred. For many years this model, which reflects the profession's traditionally conservative approach, was sufficient.
The use of historical cost has been a traditionally conservative approach and was proven sufficient for many years.
In recent years.
The document contains quiz questions and solutions related to Chapter 7 on auditing internal controls. It addresses topics like the responsibilities of management and auditors in assessing internal controls over financial reporting, the objectives of internal control, and an auditor's responsibilities to consider fraud and errors. Key objectives of auditing internal controls are to form an opinion on their effectiveness in preventing material misstatements and to evaluate controls over financial statement disclosures. Auditors must test internal controls rather than rely solely on the work of others.
Please read instructions carefully and completely Due date 41.docxLeilaniPoolsy
Please read instructions carefully and completely
Due date 4/17/15 8am Arizona time
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References page must include a valid URL to take the reader to the electronic copy of each source.
If cannot complete with the given instructions do not reply
Please contact me if you have questions
Write as a team discussion example: we discussed, she, he or I
I may change some areas at later date
Write a 700- to 1,050-word summary of the team's discussion about IFRS versus GAAP, based on your team collaborative discussions. The essay is an individual assignment; however, team collaboration is worth 30 % of the available points for the essay. Input regarding the questions for IFRS 8-1, 9-1, 9-2 and 9-3 must be posted during Week 2. Input regarding IFRS 10-2 and 10-3 must be posted during Week 3. Input posted during Week 4 must relate to the information regarding IFRS at the end of Chapters 12 and 13. For example, input regarding IFRS 10-2 posted in Week 4 will not be eligible to earn collaboration credit since the topic was related to Week 3. The summary should be structured in a subject-by-subject format. An introduction and a conclusion are needed. Your essay should include the answers to the following:
· IFRS 8-1: What are some steps taken by both the FASB and IASB to move to fair value measurement for financial instruments? In what ways have some of the approaches differed?
· IFRS 9-1: What is component depreciation, and when must it be used?
· IFRS 9-2: What is revaluation of plant assets? When should revaluation be applied?
· IFRS 9-3: Some product development expenditures are recorded as development expenses and others as development costs. Explain the difference between these accounts and how a company decides which classification is appropriate.
· IFRS 10-2: Explain how IFRS defines a contingent liability and provide an example.
· IFRS10-3: Briefly describe some similarities and differences between GAAP and IFRS with respect to the accounting for liabilities.
Format your essay consistent with APA guidelines.
Use the Financial Accounting text and at least two additional scholarly-reviewed references from the University of Phoenix Online Library. Inclusion of the URLs to take the reader directly to the Library databases is required to be eligible to earn credit for this requirement. Cite these sources when appropriate as in-text citations and list cited sources on the References page. Listed cited sources on the References page must include a valid URL to take the reader to the electronic copy of each source. The essay will not be supported if cited sources (in-text citations and References page) are omitted. If the instructor is not able to access the electronic copies by the provided URL links the essay is not supported.
The essay will include answers to above identified International Financial Reporting Standards.
Outsourcing GIA Accounting whitepaper 2016Rich Lawrence
This document discusses the considerations for insurance companies in outsourcing their general investment account (GIA) accounting functions. It explores the unique requirements of GIA accounting, including complex assets, multi-basis accounting, statutory reporting, and SOX compliance. When making the outsourcing decision, all current processes must be well-documented and understood. The potential benefits of outsourcing include cost savings and efficiency gains, but it also brings new risks that require oversight. The document analyzes the pros and cons of outsourcing GIA accounting functions.
Working capital adjustments are made when comparing a tested party's transactions to potential comparable transactions to eliminate material differences in working capital levels like inventory, receivables, and payables. A working capital adjustment calculates the value of the working capital differences using an appropriate interest rate to adjust the profit of the comparable. Courts have upheld working capital adjustments but they must be reasonably accurate and eliminate material differences on a case by case basis.
This document presents a project work on ratio analysis as a tool for financial analysis. It discusses ratio analysis as a technique for evaluating a company's financial condition and performance by calculating and comparing various financial ratios. The document defines key terms related to ratio analysis and outlines its objectives and procedures. It also classifies common financial ratios into five main categories: leverage ratios, liquidity ratios, profitability ratios, turnover/asset utilization ratios, and valuation ratios. Examples of important ratios under each category are provided.
The document discusses the key assumptions, principles, and constraints of GAAP (Generally Accepted Accounting Principles). It outlines four main assumptions: 1) entities are separate from their owners, 2) entities are ongoing concerns, 3) measurements are quantifiable and reported in currency units, and 4) entities' operations can be divided into periods. It also describes four main principles: 1) the historical cost of assets, 2) accrual-based revenue recognition, 3) matching revenues and expenses, and 4) full disclosure. Finally, it notes four main constraints: 1) estimates and judgments are used, 2) materiality of transactions, 3) consistency across periods, and 4) conservatism in financial reporting.
Intermediate Accounting, Volume 2, 13th Canadian Edition by Donald E. Kieso t...ssuserf63bd7
name:test bank for Intermediate Accounting, Volume 2, 13th Canadian Edition Donald E. Kieso
Edition:Volume 2, 13th Canadian Edition
author:Donald E. Kieso
ISBN:9781119780311
type:Test bank
format:word/zip
All chapter include
https://qidiantiku.com/test-bank-for-intermediate-accounting-volume-2-13th-canadian-edition-by-donald-e-kieso.shtml
This document discusses solutions for accounting for intangible assets. It argues that the current distinction between tangible and intangible assets is conceptually flawed. The key issues are how to provide information to help assess future cash flows and monitor management performance. The paper evaluates balance sheet recognition of intangibles and alternative solutions within the constraints of double-entry accounting. Recognition of intangibles on the balance sheet does not necessarily convey their value, as assets are employed together in a business rather than having standalone value. Alternative accounting solutions and broader financial reporting are also considered for conveying information about intangible assets.
The document provides an overview of topics related to financial reporting for the Association of Chartered Certified Accountants (ACCA) exam. It includes mind maps summarizing the conceptual framework, regulatory framework, groups/consolidated financial statements, accounting for various transactions, limitations of financial statements, and ratios for analyzing performance. The mind maps cover key concepts for each topic such as revenue recognition, taxation, impairment of assets, and creative accounting techniques that can impact the usefulness of financial statements.
The document discusses accounting standards for long-lived assets, including intangible assets. It notes that intangible assets are nonphysical assets that provide future economic benefits. The standard provides guidance on recognizing, measuring, and disclosing intangangible assets. It also discusses impairment testing of intangible assets to ensure they are carried at recoverable amounts. The standard applies to identifiable intangible assets and goodwill, but not to internally generated goodwill or brands.
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Implicitly or explicitly all competing businesses employ a strategy to select a mix
of marketing resources. Formulating such competitive strategies fundamentally
involves recognizing relationships between elements of the marketing mix (e.g.,
price and product quality), as well as assessing competitive and market conditions
(i.e., industry structure in the language of economics).
1. Financial Engineering
How to engineer books explained easy
FASB or IFRS regulation
This assignment will attempt to provide the background
of the financial engineering issues and will then explain
in easy terms how accounting books can be engineered
and improved to the advantage of shareholders and
investors
Financial Engineering 1st Assignment
Index
INTRODUCTION..............................................................................................................................................2
HOW DOES IT WORK?...................................................................................................................................2
EXAMPLE – GOODWILL AND OTHER INTANGIBLE ASSETS UNDER FASB 142.........................................3
FASB 142 DECISION TREE...........................................................................................................................5
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2. GOODWILL.....................................................................................................................................................6
HOW WE SHOULD VALUATE THESE ASSETS?...............................................................................................6
EXAMPLE – DEMONSTRATE EFFECT OF FAS 142 ON BALANCE SHEET....................................................7
BIBLIOGRAPHY..............................................................................................................................................9
How to engineer books explained easy
FASB or IFRS regulation
Introduction
The concept of financial engineering of the accounting books has been wrongly associated with cases of
non-ethical behavior and terms like “cooking the books” have been perceived with negativity. The
financial engineering techniques can actually save the corporations millions in profits and can also
improve the bottom line by paying attention to the actual rules we must follow.
The tax accounting rules are very different from the investing accounting rules because they have
different objectives. The tax authorities do not want the companies to behave unethically and show
lower earnings in the tax books than in the investor books. The tax authorities have different objectives
compared to the business owners and they incentivize the companies to spend in whatever the
government considers most important, therefore the bottom line earnings are almost always different
in both the books. The accounting rules can be subject to different interpretation. With time the law
clarifies those interpretations issuing new clarifications, updates and bulletins but again, these new laws
are also subject to additional interpretations. Eventually, all ends in a negotiation between interested
parties and the original rules are updated.
The job of the financial engineers of multinational corporations (MNC’s) is to understand the accounting
rules in every country that the company operates and engineer the structure of the statements using an
interpretation of the rules that is beneficial to the corporation. This structuring is completely fair and
legal. A candidate applying for the job of financial engineer is incentivized to show primarily his best
skills and capabilities, he is incentivized to apply the most convenient interpretation of the accounting
rules.
How does it work?
In the example we went through in the second lecture, we saw how the NPV of a truck could be stated
from $58,940 to $53,589 according to the interpretation and use of the rules. Here the objective was to
achieve the lowest NPV possible for the company according to the rules. Depending on the final
objective, a good financial engineer will try to present the figures in a way that maximizes the results.
Some of the techniques used by companies are:
• Off-balance sheet accounting, offshore partnerships and Special Purpose Vehicles (SPE’s)
2
3. • Expenses delay
• Anticipated revenue booking
• Non-recurring expenses, etc.
Some authors (Penno, 2008) argue that all accounting rule systems are plagued by the problem of
vagueness, which implies that some very important decisions cannot be objectively described as "right"
or "wrong" and must be based on an authority's judgment. This problem becomes very acute when
accounting faces rapid technological changes or changes in the way that business is done. If the
environment were static, explicit rules could eventually be developed for each category, but dynamic
environments present new problems characterized by vagueness.
Example – Goodwill and Other Intangible Assets under FASB 142
We will now focus on one of the rule books of the FASB and will try to explain in easy term how to
engineer a statement to achieve a specific objective. Some industries where these rules play a major
role are the following:
• Business Services (for example, temporary help, advertising and consulting) where people are key
assets and much of the company value is likely to be intangible
• Consumer Goods where the Brand Value is critical and provides a premium advantage
• Pharmaceuticals where patents on R&D are the key assets to the company
1
Prior to the adoption of FASB 142, it was difficult to estimate the life of a Goodwill asset, so it was
arbitrarily set at a maximum of 40 years and amortized over that period on the straight-line method. The
amortization appeared as an expense on the income statement. The manner in which Goodwill was
amortized was misleading as it was stated as an expense on the income statement and expenses are
normally not amortized. Those who evaluated company income statements showing amortization of
Goodwill often added the amount back to net income.
The FASB 142 issued in December 2001 changed some of the previous rules from the “APB Opinion 17”
book. The main difference is that some intangible assets can no longer be amortized and the reported
amounts did not decrease as before. However, impairment tests had to be implemented on such assets
and that increased the volatility of the earnings. Under FASB 142 goodwill and intangible assets that
have indefinite useful lives are not amortized but rather tested at least annually for impairment.
However intangible assets that have finite useful lives continued to be amortized over their useful lives,
but without the constraint of an arbitrary ceiling.
As an area to explore, it is mentioned in the FASB 142 that some entities capitalize costs incurred to
develop identifiable intangible assets, while others expense those costs as incurred. Some companies
1
JOSEPH M. MODICA. (2003). Accounting and Reporting. Available:
http://www.cfma.org/pubs/docs/Modica%20J%20JULYAUG.pdf. Last accessed 22 Nov 2008.
3
4. such as AOL use to capitalize expenses as costs of internally developing identifiable intangible assets and
eventually they were forced to stop doing so. Additionally, intangible assets can be either developed
internally or acquired from other businesses. In the last case, they should be recorded at their “fair”
value; that is the transaction cost. If such assets were acquired in a group, a portion of the cost should
be assigned to each individual asset based on its fair value; and if those assets were acquired with non-
cash, then a “reliable” measure should be recorded (FASB 141).
If an intangible asset is determined to have an indefinite useful life, it shall not be amortized until its
useful life is determined to be no longer indefinite. An intangible asset that is not subject to
amortization shall be tested for impairment annually or more frequently if events or changes in
circumstances indicate that the asset might be impaired (FASB 142).
4
6. Goodwill
The FASB agrees that acquired goodwill fits the definition of asset (Assets are probable future economic
benefits obtained or controlled by a particular entity as a result of past transactions or events).
According to FASB goodwill is defined the difference between the price paid for an entity and the price
amounts assigned to the assets of acquired entity and the liabilities taken by the acquiring company.
The FAS 142 statement discusses the most appropriate way of accounting for goodwill. The final
decision is to leave goodwill as non-amortized asset, but subject it to impairment tests (directed at
testing and recording the fair value of the asset). The immediate write-off was dismissed as incorrect
approach almost with no disputes. However, the decision on whether or not goodwill or part of it
should be amortized and over what period was a matter of discussion and several times Board reviewed
its decision regarding this issue. The initial decision that the Board took was finding a way to separate
goodwill into different elements (discernible elements approach) and amortize them depending on their
useful life, however this entailed too many complications and “grey areas”, so this approach was
dismissed as well.
The predicted problem with impairment tests is the internally generated goodwill that can replace the
acquired goodwill. However, current standards do not provide a way for accounting for the internally
generated goodwill. Since the synergies between the acquired entity and acquiring company are not
possible to record at the level of either, the Board introduced goodwill testing at the level of reporting
unit.
Reporting unit is a lowest level of entity that is a business and it can be seen as separated operating unit,
with separate internal reporting and physical presence. The defining or reporting unit is set in a way that
allows different organizations have reporting units at different levels, that best comply with the purpose
of goodwill accounting. Reporting units are assigned assets and liabilities only in the case when these
assets and liabilities are considered to define reporting unit’s fair value. Goodwill is allocated to
reporting units that are expected to get benefits from the acquisition’s synergies. Goodwill is to go
through impairment tests annually.
How we should valuate these assets?
Valuing intangible assets is one of the most common challenge faced by financial engineers and again,
according to their final objective (maximize or minimize its value) financial engineers tend to choose the
most convenient method. Intangibles can be for example patents and trademarks, copyrights, mailing
lists, exclusive contracts, royalty agreements, work-in-progress, proprietary designs and many others.
The actual value of anything, tangible or not, can be based on what someone else is willing to pay for it
(Kerr). The price paid for an asset has a great deal to do with who can put it to its highest and best use. If
we hold a license or copyright on a book that is not presently being distributed because you cannot
afford to do so, that right may still have great value to a larger company with more resources.
6
7. Obviously the purchaser of intangible assets will be trying to calculate whether it is better to purchase
the complete asset (a mailing list for example) or to simply duplicate the work that went into making the
asset. Therefore, Replacement Cost is another method to estimate the hours and expense of replicating
the intangible asset. Once we estimated the replacement cost as new, (often the highest price we
should pay) we could offer the owner a fair. However there is no equivalent replacement value on many
assets such as copyrights and trademarks, and no open market to draw comparisons from. Thus, we are
left with a second and sometimes more accurate tool which is the Net Present Value (NPV) method.
Now the goal is to determine what would be the future cash flows over the projected economic life and
then derive the NPV of the asset today.
Example – Demonstrate effect of FAS 142 on Balance Sheet
The difference in accounting due to introduction of FAS 142 can be illustrated with the help of an
example below. Consider a fictitious company ABC which buys another company XYZ in 1998 with a
goodwill value of $ 250000.
1. In 1998, 1999 and 2000 the amortization value of Goodwill is $ 6250, based on straight line
depreciation for a period of 40 years
2. From 2001 onwards the accounting will be based on FAS 142. The fair value of goodwill as per
certified valuation analyst is estimated to be impaired by $ 20,000.
3. In 2002 the impaired value is estimated again but this year the Goodwill of the company has an
improved value. The value of the impairment remains the same for this year as the Goodwill
improvement values do not result in change in Goodwill value.
Assets
1998 1999 2000 2001 2002
Current Assets
Cash 30000 28000 32000 33000 10000
A/R 345200 321600 321400 321400 345100
Total Current Assets 375200 349600 353400 354400 355100
Fixed Assets 150000 150000 150000 150000 150000
Accumulated Depreciation (15000) (30000) (45000) (60000) (75000)
New Fixed Asset 135000 120000 105000 90000 75000
Intangible Assets
Goodwill 250000 250000 250000 250000 250000
Accumulated
amortization (6250) (12500) (18500) (18500) (18500)
Goodwill Impairment (20000) (20000)
New Intangible Assets 243750 237500 231500 211500 211500
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