Accounting for Investments, Equities, Futures and Options, Volume 1

Contents

Foreword

Preface

Acknowledgments

Chapter 1: Financial Instruments

Learning Objectives

Accounting Standards for Financial Instruments

Definition of Financial Instruments

Categories of Financial Instruments

Fair Value Measurement Concepts

Recognition and Derecognition of Financial Instruments

Types of Investments

Difference between Investment and Speculation

Two Major Standards: U.S. GAAP and IFRS

Summary

Exercises

Chapter 2: Accounting for Equity Investments: Trading

Learning Objectives

Accounting Standards for Equity Investments

Definition of Equity Securities

Passive Investments: Less than 20 Percent

Significant Influence: 20–50 Percent

Controlling Interest—More than 50 Percent

Exchange-Traded Securities versus Over-the-counter Securities

The Trade Life Cycle for Equity Trading Securities

FX Revaluation and FX Translation Process

Trade Date Accounting versus Settlement Date Accounting

Distinction between Capital Gains and Currency Gains

Summary

Exercises

Chapter 3: Accounting for Equity Investments: Available-for-Sale

Learning Objectives

Accounting Standards for Equity Investments: Available-for-sale

Basic Understanding of AFS

The Trade Life Cycle for Available-for-sale Equity

FX Translation on AFS Securities

Impairment of AFS Securities

Summary

Exercises

Chapter 4: Transfer of Categories

Learning Objectives

Transfer between Categories

Presentation in Income Statement

Deferred Tax Effects on Unrealized Gain/Loss

Summary

Exercises

Chapter 5: Equity Derivatives: Theory ...