genuinecfa

Intelo, no shame in bowing down to you

Actually most of these questions are memory based, except last one which is conceptual and I think I am messing it.

Regarding Q8, you are correct and I was wrong. AFS Securities are INITIALLY recorded at their Fair Values, INCLUDING Transaction Costs under BOTH IFRS and US GAAP.

Regarding Q10: From my understanding:

Asset values are directly related to Exchange Rates and Liabilities are Inversely related to Exchange Rates. By this definition, options A and C should be out.

Option B is also not true, as Net Income under Current Rate method would be based on Average Exchange Rate for the year and in Appreciating Foreign Currency environment, Average Rate would be higher than the rate at the beginning of the year.

I agree with your logic of +CTA, but that should not make Liabilities Increase as stated in option A.

Damil4real, thanks for posting questions.



Edited 1 time(s). Last edit at Tuesday, January 5, 2010 at 10:05PM by rus1bus.

liquidity

Guys lets try to give explanations wherever we can. It will help us better understand those concepts.

KungFuPanda

you will bow down rus1bus, you will bow down . Can you please give me an explanation for your answers where we differ? thanks

troymo

Here's what I put down:

1. C
2. A
3. A
4. B
5. A
6. A
7. C
8. C
9. C
10. A

NO EXCUSES

bingbingliang

My answers would be:

1. B)
2. A)
3. A)
4. A)
5. B) Not sure
6. A) Not sure
7. C)
8. B)
9. C)
10. Dont know, all options seem incorrect to me. Not convinced with intelo's argument yet

comp_sci_kid

some of these seems strange but here are my answers:

1) B. (totalling guessing here) 2) A. (thats a requirement under GAAP. IFRS allows both methods but prefers PC) 3) A. (there has been convergence) 4) A. (under GAAP you first need to figure if there was impairement, then come up with an implied GW value to figure out the loss) 5) C. (guessing here, given convergence) 6) C. 7) C. never heard of this method. is this pooling? 8) A. Transaction costs are always included 9) C. 10) A. under the current method, you always have a net Assets BS exposure. When the FC appreciates u have a + CTA in Equity vice versa. Your assets increase along with your liabiliies so provided your assets > Liabilities, you gain.