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mkytz15

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tT
发表于 2011-7-13 16:01 | 只看该作者

recording FV of AFS, HTM, HFT, investment in associate

investment, recording, include, about, given
if we are given
HTM: amoritized cost of 100
HFT: FV of 100
AFS: FV of 100
Equity investment in A: FV 200

on the B/S, normally we have 100+100+100 for HTM, HFT and AFS.

what about the Equity investment of 200? do we include that as well?
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madaochenggong

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2#
发表于 2011-7-13 16:01 | 只看该作者
I think so. Equity investment is recorded at initial cost + % of earnings from investee - all dividends received. But what I don't understand is that it says since 2007, equity may be recorded at fair value. That would be completely different.

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spreads

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3#
发表于 2011-7-13 16:01 | 只看该作者
Under cost method 200 is recorded under non-current assets in BS.

If it is recorded at fair value

* Initially added to BS at fair value. No goodwill is created. For example purchased for 200 and fair value of asset at the time of investing is 180, 20 writes off to IS ( do not recognize 20 goodwill)

*Dividend goes to IS.

* No proportionate income is recognized /added to investment value.

* Instead, subsequent fair value, say market value, changes are recognized in IS, just like HFT.

* Hence, no impairment.

IS = Income statement, BS= Balance sheet

Hope this may help.

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jarobi04

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4#
发表于 2011-7-13 16:01 | 只看该作者
esandun Wrote:
-------------------------------------------------------
> Under cost method 200 is recorded under
> non-current assets in BS.
>
> If it is recorded at fair value
>
> * Initially added to BS at fair value. No goodwill
> is created. For example purchased for 200 and fair
> value of asset at the time of investing is 180, 20
> writes off to IS ( do not recognize 20 goodwill)
>
> *Dividend goes to IS.
>
> * No proportionate income is recognized /added to
> investment value.
>
> * Instead, subsequent fair value, say market
> value, changes are recognized in IS, just like
> HFT.
>
> * Hence, no impairment.
>
> IS = Income statement, BS= Balance sheet
>
> Hope this may help.


This looks correct and logical, almost treating equity investment as HfT.
Was this in the book?

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onelife1

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5#
发表于 2011-7-13 16:01 | 只看该作者
esandun Wrote:
-------------------------------------------------------
> Under cost method 200 is recorded under
> non-current assets in BS.
>
> If it is recorded at fair value
>
> * Initially added to BS at fair value. No goodwill
> is created. For example purchased for 200 and fair
> value of asset at the time of investing is 180, 20
> writes off to IS ( do not recognize 20 goodwill)
>
> *Dividend goes to IS.
>
> * No proportionate income is recognized /added to
> investment value.
>
> * Instead, subsequent fair value, say market
> value, changes are recognized in IS, just like
> HFT.
>
> * Hence, no impairment.
>
> IS = Income statement, BS= Balance sheet
>
> Hope this may help.


Vol.2. pp. 130, 137-138.

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