The 2008 financial crisis highlighted the need for responsible
corporate governance within financial institutions. The key to
ensuring that adequate standards are maintained lies with effective
accounting and auditing standards. Accounting for
Investments: Equities, Futures and Options offers a
comprehensive overview of these key financial instruments and their
treatment in the accounting sector, with special reference to the
regulatory requirements. The book uses the US GAAP requirements as
the standard model and the IFRS variants of the same are also
given.
Accounting for Investments starts from the basics
of each financial product and:
* defines the product
* analyses the structure of the product
* evaluates its advantages and disadvantages
* describes the different events in the trade cycle
* elaborates on the accounting entries related to these
events.
The author also explains how the entries are reflected in the
general ledger accounts, thus providing a macro level picture for
the reader to understand the impact of such accounting.
Lucidly written and informative, Accounting for
Investments is a comprehensive guide for any professional
dealing with these complex products. It also provides an accessible
text for technology experts who develop software and support
systems for the finance industry.
Autorentext
A graduate of the University of Madras, R. Venkata Subramani
is a Chartered Accountant who began his career with a professional
accounting firm in Chennai before becoming the Managing Director of
Quintegra Solutions Limited from 1994-2004.
Since 2005, he is the Chief Operations Officer of Variman Capital
Markets Services Private Limited in Chennai, India. Venkata
Subramani manages a team of core finance and accounts professionals
and is responsible for the daily operations including the
preparation of net asset value (NAV), portfolio valuation and
accounting, partnership allocation and accounting, for various
global clients.
Venkata Subramani taught at the Institute of Chartered Accountants
of India and the University of Madras from 1984-1990. He
lives in Chennai with his wife and daughter.
Zusammenfassung
The 2008 financial crisis highlighted the need for responsible corporate governance within financial institutions. The key to ensuring that adequate standards are maintained lies with effective accounting and auditing standards. Accounting for Investments: Equities, Futures and Options offers a comprehensive overview of these key financial instruments and their treatment in the accounting sector, with special reference to the regulatory requirements. The book uses the US GAAP requirements as the standard model and the IFRS variants of the same are also given.
Accounting for Investments starts from the basics of each financial product and:
- defines the product
- analyses the structure of the product
- evaluates its advantages and disadvantages
- describes the different events in the trade cycle
- elaborates on the accounting entries related to these events.
The author also explains how the entries are reflected in the general ledger accounts, thus providing a macro level picture for the reader to understand the impact of such accounting.
Lucidly written and informative, Accounting for Investments is a comprehensive guide for any professional dealing with these complex products. It also provides an accessible text for technology experts who develop software and support systems for the finance industry.
Inhalt
Foreword xiii
Preface xv
Acknowledgments xxi
Chapter 1 Financial Instruments 1
Learning Objectives 1
Accounting Standards for Financial Instruments 1
Definition of Financial Instruments 2
Categories of Financial Instruments 3
Fair Value Measurement Concepts 4
Recognition and Derecognition of Financial Instruments 5
Types of Investments 5
Difference between Investment and Speculation 5
Two Major Standards: U.S. GAAP and IFRS 6
Summary 8
Exercises 9
Chapter 2 Accounting for Equity Investments: Trading 11
Learning Objectives 11
Accounting Standards for Equity Investments 11
Definition of Equity Securities 12
Passive Investments: Less than 20 Percent 13
Significant Influence: 2050 Percent 15
Controlling InterestMore than 50 Percent 15
Exchange-Traded Securities versus Over-the-counter Securities 16
The Trade Life Cycle for Equity Trading Securities 16
FX Revaluation and FX Translation Process 33
Trade Date Accounting versus Settlement Date Accounting 39
Distinction between Capital Gains and Currency Gains 42
Summary 65
Exercises 67
Chapter 3 Accounting for Equity Investments: Available-for-Sale 75
Learning Objectives 75
Accounting Standards for Equity Investments: Available-for-sale 75
Basic Understanding of AFS 76
The Trade Life Cycle for Available-for-sale Equity 76
FX Translation on AFS Securities 79
Impairment of AFS Securities 79
Summary 114
Exercises 115
Chapter 4 Transfer of Categories 121
Learning Objectives 121
Transfer between Categories 121
Presentation in Income Statement 122
Deferred Tax Effects on Unrealized Gain/Loss 123
Summary 135
Exercises 136
Chapter 5 Equity Derivatives: Theory 141
Learning Objectives 141
Accounting Standards for Equity Derivatives 141
Derivatives in a Financial Security 142
Definition of Derivatives per Accounting Standards 143
Forward Contract 145
Futures Contract 145
Futures versus Forwards 146
Components of a Futures Contract 149
Open Interest in Derivatives Contracts 151
Method of Computing Open Interest 151
What Does Change in Open Interest Indicate? 152
Pricing of a Futures Contract 152
Stock Futures and Index Futures 152
Summary 153
Exercises 154
Chapter 6 Accounting for Equity Index Futures 159
Learning Objectives 159
The Trade Life Cycle for Equity Index Futures 159
Illustrations with FX Translation 165
Summary 212
Exercises 212
Chapter 7 Accounting for Equity Stock Futures 217
Learning Objectives 217
Trade Life Cycle for Equity Stock Futures 217
Illustrations 219
Summary 254
Exercises 254
Chapter 8 Accounting for Equity Call Options 259
Learning Objectives 259
Accounting StandardsDerivative Instruments and Hedging Activities 259
Trade Life Cycle for ETOsLong Call Non-hedging 260
Illustrations 265
Trade Life Cycle for Exchange-Traded OptionsOn Writing a Call Option 288
Illustrations 293
Summary 302
Exercises 302
Chapter 9 Accounting for Equity Put Options 309
Learning Objectives 309
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