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33 Cards in this Set
- Front
- Back
- 3rd side (hint)
Can be bought or sold between 2 parties and has basic terms defined with amount borrowed, interest rate, maturity and renewal date.
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Debt Instruments |
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Formal unconditional promise, made under seal to pay a specified sum of money at a determinable future date and to make periodic interest payments at a stated rate until the principal sum is paid. |
Bonds |
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Certificate of indebtedness issued by the bond issuer which entitles the bondholder to receive principal and interest payments. |
Bond Certificate |
Serves as proof of ownership over bonds by the imvestor. |
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Unconditional contract between the bond issuer and the bondholder that specifies terms of the bond |
Bond Indenture |
Deed of trust, bond resolution or bond contract |
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Bonds which matures on a single date |
Term bonds |
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Bonds with a series of maturity dates
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Serial bonds |
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Bonds secured by a mortgage |
Mortgage bonds |
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Bonds secured by stocks and bonds of other corporation |
Collateral trust bonds |
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Bonds guaranteed by another party's promise to pay in case the bond issuer fails to make payments |
Guaranteed bonds |
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Bonds without any security or collateral |
Debenture Bonds |
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Classification of Debt Instrument |
FVTPL, FVOCI, FAAC |
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Classification of Debt Instrument |
FVTPL, FVOCI, FAAC |
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Measurement for Debt Instrument |
FV + Transaction cost, except FVTPL |
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FV Determinant |
Quotation price in an active market PV of related cash flows using EIR |
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FS Presentation |
FVTPL-Current Assets FVOCI, FAAC- Noncurrent Asset unless due within 12 months |
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FVTPL Classification |
Held for trading Irrevocable designation at FVTPL Other investments that do not satisfy the requirements for measurement at AC and FVOCI |
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FVTPL Initial Measurement |
Acquisition cost TC expensed outright |
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FVTPL Business Model |
To sell bonds in near term to take advantage of the fluctuations for short term profit taking |
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FVTPL UG/UL |
P/L |
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Premium or Discount in FVTPL |
Not amortized at the end of reporting period Interest income will include the nominal or stated interest earned during the period. |
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Realized Gain on Derecognition on FVTPL |
Recognized in P/L Difference between the net selling price and CA (FV to date) Consideration received XX Less: Interest income on investment sold XX Transaction cost XX Net Selling Price XX LESS CA @ FV TO DATE |
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FAAC initial measurement |
Acquisition cost + Transaction cost |
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Bond Schemes |
At face amount: Proceeds= Face Value At Premium: Proceeds } Fave Value At Discount: Proceeds { Face Value Maturity Value : Face Amount |
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At Premium |
Effective Rate is less than Nominal Rate |
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At Discount |
Effective rate is more than nominal rate |
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Bond Computation on Purchase Price/ Present Value |
PV of Principla Payment PV of Interest Payment |
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Term Bonds Acquired in Between Interest Dates |
1 Compute the Present value of the bonds on the last interest date |
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Purchase Price, PV Date of Acquisition, PV on last interest date formula |
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Not yet done |
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Acquisition of investment bonds with warrants |
Use Relative Fair Value to allocate the acquisition cost |
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Computation of PV on serial bonds |
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Subsquent Measurement of FAAC |
Amorization by EIR |
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Subsequent Measurement of FAAC |
Amortized cost using EIR |
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Amortization of Premium or Discount |
EntroEnt |
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