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

Learning Objectives

Accounting Standards for Equity Derivatives

Derivatives in a Financial Security

Definition of Derivatives per Accounting Standards

Forward Contract

Futures Contract

Futures versus Forwards

Components of a Futures Contract

Open Interest in Derivatives Contracts

Method of Computing Open Interest

What Does Change in Open Interest Indicate?

Pricing of a Futures Contract

Stock Futures and Index Futures

Summary

Exercises

Chapter 6: Accounting for Equity Index Futures

Learning Objectives

The Trade Life Cycle for Equity Index Futures

Illustrations with FX Translation

Summary

Exercises

Chapter 7: Accounting for Equity Stock Futures

Learning Objectives

Trade Life Cycle for Equity Stock Futures

Illustrations

Summary

Exercises

Chapter 8: Accounting for Equity Call Options

Learning Objectives

Accounting Standards—Derivative Instruments and Hedging Activities

Trade Life Cycle for ETOs—Long Call Non-hedging

Illustrations

Trade Life Cycle for Exchange-Traded Options—On Writing a Call Option

Illustrations

Summary

Exercises

Chapter 9: Accounting for Equity Put Options

Learning Objectives

Trade Life Cycle for Exchange-Traded Options—Long Put, Non-hedging

Illustrations

Trade Life Cycle for Exchange-Traded Options—On Writing a Put Option

Illustrations

Summary

Exercises

Chapter 10: Equity Options: Hedge Accounting

Learning Objectives

Accounting Standards—Derivative Instruments and Hedging

The Trade Life Cycle for ETOs—Long Put as Hedging

Illustrations

Summary

Exercises

Chapter 11: Accounting for Contract for Difference

Learning Objectives

Definition of CFD

Product Features of CFDs

The Trade Life Cycle for CFDs

Illustrations

Summary

Exercises

Chapter 12: Accounting for Short Equity Investments

Learning Objectives

Definition of Short Equity Securities

Types of Short Sales

Process of Short-selling

Risks of Short-selling

Box Position and Short-selling

Rationale of Short-selling

Regulatory Requirements of Short Sales

Securities Lending

The Trade Life Cycle for Equity Short Sales

Illustrations

Summary

Exercises

Chapter 13: Accounting for ADR/GDR Investments

Learning Objectives

Definition of a Depositary Receipt

Issuance and Cancellation of DRs

DR Ratio and Pricing

Benefits of DRs to Issuers

Benefits to Investors

What are ADR and GDR?

Different Types of ADR Issues

Risks Associated with Investment in DRs

Restricted Programs

The Trade Life Cycle for Equity ADR Securities

Illustrations

Summary

Exercises

Chapter 14: Presentation and Disclosures

Learning Objectives

Accounting Standards for Presentation and Disclosure

Presentation in Income Statement

Differences between U.S. GAAP and IFRS

Disclosure Requirements under U.S. GAAP

Disclosure Requirements under IFRS

Requirements by IFRS 7

Statement of Profit and Loss and Equity

Other Disclosures

Market Risk

Summary

Exercises

Appendix A: Basics of Accounting Theory

Appendix B: Accounting Standards for Financial Instruments

Appendix C: Financial Statements of Sample Fund

Appendix D: Glossary of Technical Terms

Bibliography

Index

..................Content has been hidden....................

You can't read the all page of ebook, please click here login for view all page.
Reset
3.128.199.162