FS 2 medio aperto

Trading securities are short-term investments reported immediately after cash on the Balance Sheet and are reported at mark to market with unrealized gains or losses, while held-to-maturity bonds are reported at amortized cost and fluctuate with market interest rates, with prices quoted as a percentage of par.

M&A is used for high influence, equity method for lighter influence, and available-for-sale or trading securities for very little influence.

The investor's intent determines if it's available-for-sale or held-to-maturity.

<p>The Conceptual Framework defines liability as obligations settled through outflow of resources embodying economic benefit, with short-term liabilities being current and long-term liabilities being non-current based on financial criteria.</p> Signup and view all the answers

<p>The decision on investment classification is crucial and is made by the Board of Directors, with the CFO likely making a proposal and auditors checking the decision.</p> Signup and view all the answers

<p>The key considerations in bond valuation include the amount of money at issuance, determination of interest expense, amortization of discount/premium, and payment due at maturity.</p> Signup and view all the answers

<p>Liabilities are classified as short-term or long-term, definite or indefinite in amount, and certain or contingent. Short-term, definite, and certain liabilities are reported at nominal value, while long-term, definite, and certain liabilities are reported at present value. Liabilities of indefinite amount need to be estimated, and contingent liabilities are disclosed in the notes.</p> Signup and view all the answers

<p>Cash inflows and outflows are grouped into operations, investing, and financing activities on a cash flow statement.</p> Signup and view all the answers

<p>The two methods for preparing a cash flow statement are the direct method and the indirect method. The indirect method is used by 99.9% of companies for preparing the cash flow statement.</p> Signup and view all the answers

<p>The direct method involves reporting actual cash receipts and payments for operating, investing, and financing activities, while the indirect method involves adjusting net income for non-cash items and changes in operating assets and liabilities to derive cash flow from operations.</p> Signup and view all the answers

<p>The indirect method is needed to reconcile the income position to the cash position, as the cash flow and earnings flow may not coincide due to accrual basis reporting.</p> Signup and view all the answers

<p>The Balance Sheet equation is ASSET = LIABILITY + EQUITY. In the indirect method, the Balance Sheet equation is re-classified to focus on the cash, where Cash = Net Income – Non-cash Current Assets + Current Liabilities – Long-lived assets + Long-term Liabilities + Capital – Dividends.</p> Signup and view all the answers

<p>The change in cash, represented as Δ +/- Cash, equals the change in all the other items, including cash flow from operations, investing, financing, and other changes in assets and liabilities.</p> Signup and view all the answers

<p>The indirect method focuses on rearranging the Balance Sheet equation to identify the portion of income that is also cash flow, providing a reconciliation between income and cash positions.</p> Signup and view all the answers

<p>Observing the cash flow changes allows for a better understanding of the reconciled cash flow position and provides insights into the discrepancies between earnings flow and cash flow.</p> Signup and view all the answers

<p>Goodwill = Price paid - Equity book value – FMV adjustments, which can be expressed as $Goodwill = $253 million - $213 million- ($35 million-$20 million) = $25 million</p> Signup and view all the answers

<p>Goodwill is the excess of the cost of an acquired company over the sum of the FMV of its identifiable assets less the liabilities</p> Signup and view all the answers

<p>When a company acquires a percentage interest in another company, the consideration of 'minority interests' or 'interest of the non-controlling company' becomes important in the process of consolidation and disclosure.</p> Signup and view all the answers

<p>Goodwill = $253 million - $213 million- ($35 million-$20 million) = $25 million</p> Signup and view all the answers

<p>The potential residual part that may remain in the hands of the shareholder of B is referred to as 'minority interests' or 'interest of the non-controlling company' in the context of consolidation and disclosure.</p> Signup and view all the answers

<p>Accrued liabilities include expenses that have been incurred but not yet paid or invoiced, such as accrued salaries, accrued interest, or accrued taxes. Unearned revenues represent payments received for services not yet delivered, such as advance customer payments for services or unearned subscription revenue.</p> Signup and view all the answers

<p>Provisions are amounts set aside to cover future expenses or risks, such as provisions for bad debts, provisions for legal claims, or provisions for restructuring costs.</p> Signup and view all the answers

<p>Market interest rates and bond prices have an inverse relationship. When market interest rates rise, bond prices fall, and vice versa. This is because existing bonds with lower interest rates become less attractive compared to new bonds with higher interest rates, causing their prices to decrease.</p> Signup and view all the answers

<p>Bonds are issued at par, discount, or premium based on the relationship between the coupon rate and the market interest rate. If the coupon rate is equal to the market rate, the bond is issued at par. If the coupon rate is lower than the market rate, the bond is issued at a discount. If the coupon rate is higher than the market rate, the bond is issued at a premium.</p> Signup and view all the answers

<p>The present value of a bond obligation is computed by discounting the future cash flows (interest payments and principal repayment) using the market interest rates. The sum of the present values of all future cash flows represents the present value of the bond obligation.</p> Signup and view all the answers

<p>Equity attributable to the parent company represents the portion of the total equity that belongs to the parent company, while equity attributable to the shareholder of B represents the portion of the total equity that belongs to the specific shareholder of B.</p> Signup and view all the answers

<p>Ownership percentages determine whether an investment should be consolidated, treated as a financial investment, or considered for return without exerting influence. These percentages impact financial reporting by influencing the method of accounting, the level of control or influence, and the presentation of the investment in the financial statements.</p> Signup and view all the answers

<p>The Equity Method is used for financial investments to adjust the investment based on the investee's profits and dividends. Under this method, the investor recognizes its share of the investee's profits or losses in its income statement and adjusts the carrying amount of the investment accordingly.</p> Signup and view all the answers

<p>Available for sale or trading securities are reported on the Balance Sheet using mark-to-market, reflecting their current market value. Unrealized gains or losses from these securities are recorded in the Income Statement under other comprehensive income.</p> Signup and view all the answers

<p>The main components and processes involved in the preparation of consolidated financial statements include pooling revenues, expenses, assets, and liabilities of all legal entities within the consolidation perimeter. It is important to ensure homogeneity in financial statements closing dates, accounting principles, currency adopted, and format of financial statements. Intercompany transactions need to be eliminated, and typical accounting items in consolidation are minority and goodwill interest.</p> Signup and view all the answers