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Last update 26/11/2019 Convertible note with embedded derivative The numbers provides the numbers to the case and the journal entries and calculations. In practice, many conversion features in convertible notes fail equity classification, which means that the conversion feature is a financial liability. Convertible note with embedded derivative The numbers The reason that many conversion … Read more
Last update 11/12/2019 Hedge accounting – What is this all about? If investors purchase a security that comprises a high level of risk, they may accompany the purchase with an opposing item (usually a derivative, such as an option or future contract) referred to as a hedge. This hedge experiences gains in value when the … Read more
Last update 26/11/2019 Convertible note with embedded derivative Basics provides an introduction to this accounting subject, completed in the calculation example provided here. In practice, many conversion features in convertible notes fail equity classification, which means that the conversion feature is a financial liability. The reason that many conversion features fail equity classification is that … Read more
Last update 28/12/2019 Grouping similar hedging transactions – It sometimes will be impractical (perhaps impossible) and not cost-effective for an entity to identify each individual transaction that is being hedged. An example is a group of sales or purchases over a period of time to or from one or more parties. IFRS 9 permits an … Read more
Last update 18/11/2019 Control without a majority of voting rights is a more special case of structuring the investments of investors in companies. IFRS 10 confirms that an investor with the majority of an investee’s voting rights controls an investee in most circumstances. In the absence of other relevant factors the majority vote holder has … Read more
Last update 05/01/2020 Group treasury function – the goal of most treasury functions is to optimize the organization’s liquidity, make sound financial investments, mitigate financial risks, and provide useful cash/interest/investment reporting. A treasury function is (depending on the size of a group) a centralised support and service function that acts as the custodian of a … Read more
Last update 26/11/2019 Control Structured entity with Credit-linked notes provides a case regarding control through contractual arrangements in a Special Purpose Vehicle or better NO control. Following is a case on the assessment whether certain stakeholders in a transaction/structure have obtained control over a certain entity in the transaction in line with the requirements of … Read more
Last update 17/12/2019 General model of measurement of insurance contracts – Insurance contracts may be highly complex bundles of interdependent rights and obligations and combine features of a financial instrument and features of a service contract. As a result, insurance contracts can provide their issuers with different sources of income – e.g. underwriting profit, fees from … Read more
Last update 23/12/2019 Control over structured entities – Although IFRS 10 has no separate guidance on Special Purpose Entities (SPEs), it does have guidance on assessing control over entities for which voting rights do not have a significant effect on returns. Despite the lack of a definition, entities typically considered to be SPEs in practice … Read more
Last update 09/12/2019 The general approach expected credit losses is what it is the most accepted or normal or preferred way of loss provisioning financial assets to a level at which it is becoming unlikely that they are overstated. Under the “expected credit loss” model, an entity calculates the allowance for credit losses by considering … Read more