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REPORTING OF INTERCORPORATE INVESTMENTS


-Held-to-Maturity


-Fair Value through Profit/Loss


-Available for Sale

-Held-to-Maturity: Debt securities only with the intent to hold to maturity; they cannot be sold early; reported at an amortized cost on the balance sheet (amortized cost - PV of cash flows)
-Fair Value through Profit/Loss: a) Held-for-trading: Debt or Equity securities held for near term; reported at fair value (realized or unrealized) on the income statement b) Designated at fair value: Similar to Held-for-trading but securities have the option to held as other securities
-Available for Sale: Debt or Equity; reported as fair value but only with realized gains/losses; Unrealized gains/losses are reported as part of shareholders' equity

Reported at Amortized Cost
Reported with Gains/Loses
Reported with Gains (Losses in Shareholder Equity)

REPORTING OF INTERCORPORATE INVESTMENTS
-Calculate Held-to-Maturity Amortization Cost

Value of Bond's on Book +
[(Issue (Purchase Price) * Yield) - (Par Value * Coupon Payment)]

Summary: Value of Bond on Book + (Yield Growth - Actual Payment)

Growth of Yield vs Actual Payment

REPORTING OF INTERCORPORATE INVESTMENTS
-Reclassification of Investments in Financial Assets (IFRS vs GAAP) and Unrealized Gain or Loss
a) Fair Value through profit or loss to any
b) Held-to-Maturity to fair value of profit loss
c) Held-to-Maturity to available-for-sale
d) Available-for-sale to Held-to-Maturity
e) Available-for-sale to Fair value through profit or loss
   


IFRS does not allow one type

REPORTING OF INTERCORPORATE INVESTMENTS
Full Goodwill
Partial Goodwill
Pooling Method Goodwill

Full Goodwill
-The difference between your valuation of the company (paid/%ownership) and what Shareholders equity fair value is
Pooling Method
-No good will is created
Partial Goodwill
-The difference between what you are paying and what that percentage is actually worth

Full (You consider everything)
Partial (Consider Relative to what you bought)
Pooling

REPORTING OF INTERCORPORATE INVESTMENTS
Post-Acquisition Long-Term Debt to Equity Ratio

Long-Term Debt - (Acquirer, Book Value) + (Acquired, Fair Value)
Equity - (Acquirer, Book Value) + (What I am paying for Piece) + Non Controlling Interest (what is left as per my valuation)

My Book versus what I expect to pay

REPORTING OF INTERCORPORATE INVESTMENTS
Impairment of Goodwill

IFRS -
Focus on: Cash Generating Unit
Compares: Carrying Value vs Recoverable Amount Impairment Loss = Carrying Value of CGU - Recoverable Amount of CGU

US GAAP-
Focus on: Reporting Unit
Compares: Carrying Value vs Fair Value
Impairment Loss = Carrying Value of Goodwill - Implied value of Good will
Implied Value of Good will = Lesser of(Fair value of Reporting Units and Sum of Fair Value of Net Assets of Reporting Unit)

IFRS vs GAAP
1 Step vs 2 Step