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22 Cards in this Set
- Front
- Back
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6 Broad Measurement Bases for Financial Instruments |
1. Historical Cost 2. Current Cost (Replacement Cost) 3. Fair Value (Most relevant measure) 4. Net realizable value 5. Value in use 6. Deprival Value |
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CICA 3855 |
Financial Instruments - Recognition and Measurement -When to recognize a financial instrument on the balance sheet -At what amount -Specifies how to present related gains and losses |
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CICA 1530 |
Comprehensive Income Introduces various concepts |
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Other Comprehensive Income Definition (CICA 1530) |
A temporary presentation of certain gains and losses outside of net income |
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Comprehensive income Definition (CICA 1530) |
Change in value of net assets that is not due to owner activities |
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Comprehensive Income Formula |
Comprehensive Income = Net Income + Other comprehensive Income |
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Total Accumulated Other Comprehensive Income Formula |
Total Accumulated Other Comprehensive Income = (Fair Value - Amortized Value) of Available-for-sale bonds |
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Types of Financial Assets |
Loans-and-receivables Held-to-maturity Available-for-sale Held-for-trading |
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Loans-and-receivables Subsequent Measurement |
Amortized cost using the effective interest method |
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Loans-and-receivables Gains and losses |
Recognized in net income when balance sheet value is derecognized |
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Loans-and-receivables Definition |
Non-derivative financial assets from the delivery of cash by a lender to a borrower in return for a promise to repay on specific dates, excluding debt securities
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Held-to-Maturity Subsequent Measurement |
Amortized cost using the effective interest method |
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Held-to-Maturity Gains and Losses |
Recognized in net income when balance sheet value is derecognized |
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Held-to-Maturity Definition |
Non-derivative financial assets with fixed payments and maturity and the entity has the positive intention and ability to hold to maturity |
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Held-to-Maturity Important Disadvantage |
If there are significant sales of assets in this category before maturity, must reclassify all as available for sale (unless reason beyond control) Cannot use category for 2 years if happens |
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Available-for-sale Subsequent measurement |
Fair value Except: equity instruments that do not have a quoted market price in an active market = measured at cost |
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Available-for-sale Gains and losses |
Recognized in other comprehensive income, transferred to net income when balance sheet value is derecognized |
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Available-for-sale Definition |
Non-derivative financial assets not classified as loans-and-receivables, held-to-maturity or held-for-trading |
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Held-for-trading Subsequent measurement |
Fair Value |
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Held-for-trading Gains and losses |
Recognized immediately in net income |
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Held-for-trading Definition |
Original intent: financial asset or liability acquired principally for the purpose of selling or repurchasing in the near term Any financial asset or liability that the entity would like to measure at fair value with gains and losses recognized immediately in net income |
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Investment Income |
Investment Income= Coupons received +(market value - amortized value) of bonds held-for-trading |
