Details

Accounting for Investments, Volume 1

Equities, Futures and Options
1. Aufl.

von: R. Venkata Subramani
132,99 €
Verlag:	Wiley
Format:	EPUB
Veröffentl.:	03.11.2011
ISBN/EAN:	9781118179611
Sprache:	englisch
Anzahl Seiten:	832

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Beschreibungen

Titelbeschreibung

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: <ul> <li>defines the product</li> <li>analyses the structure of the product</li> <li>evaluates its advantages and disadvantages</li> <li>describes the different events in the trade cycle</li> <li>elaborates on the accounting entries related to these events.</li> </ul> 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.

Inhaltsverzeichnis

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: 20–50 Percent 15 Controlling Interest—More 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 Standards—Derivative Instruments and Hedging Activities 259 Trade Life Cycle for ETOs—Long Call Non-hedging 260 Illustrations 265 Trade Life Cycle for Exchange-Traded Options—On Writing a Call Option 288 Illustrations 293 Summary 302 Exercises 302 Chapter 9 Accounting for Equity Put Options 309 Learning Objectives 309 Trade Life Cycle for Exchange-Traded Options—Long Put, Non-hedging 309 Illustrations 315 Trade Life Cycle for Exchange-Traded Options—On Writing a Put Option 338 Illustrations 344 Summary 353 Exercises 353 Chapter 10 Equity Options: Hedge Accounting 357 Learning Objectives 357 Accounting Standards—Derivative Instruments and Hedging 358 The Trade Life Cycle for ETOs—Long Put as Hedging 365 Illustrations 372 Summary 412 Exercises 413 Chapter 11 Accounting for Contract for Difference 419 Learning Objectives 419 Definition of CFD 419 Product Features of CFDs 419 The Trade Life Cycle for CFDs 424 Illustrations 432 Summary 470 Exercises 471 Chapter 12 Accounting for Short Equity Investments 477 Learning Objectives 477 Definition of Short Equity Securities 477 Types of Short Sales 478 Process of Short-selling 478 Risks of Short-selling 479 Box Position and Short-selling 479 Rationale of Short-selling 480 Regulatory Requirements of Short Sales 480 Securities Lending 480 The Trade Life Cycle for Equity Short Sales 483 Illustrations 490 Summary 534 Exercises 536 Chapter 13 Accounting for ADR/GDR Investments 539 Learning Objectives 539 Definition of a Depositary Receipt 539 Issuance and Cancellation of DRs 540 DR Ratio and Pricing 540 Benefits of DRs to Issuers 540 Benefits to Investors 540 What are ADR and GDR? 541 Different Types of ADR Issues 541 Risks Associated with Investment in DRs 542 Restricted Programs 543 The Trade Life Cycle for Equity ADR Securities 543 Illustrations 549 Summary 575 Exercises 576 Chapter 14 Presentation and Disclosures 583 Learning Objectives 583 Accounting Standards for Presentation and Disclosure 583 Presentation in Income Statement 583 Differences between U.S. GAAP and IFRS 584 Disclosure Requirements under U.S. GAAP 586 Disclosure Requirements under IFRS 588 Requirements by IFRS 7 589 Statement of Profit and Loss and Equity 591 Other Disclosures 591 Market Risk 595 Summary 597 Exercises 598 Appendix A Basics of Accounting Theory 603 Appendix B Accounting Standards for Financial Instruments 609 Appendix C Financial Statements of Sample Fund 621 Appendix D Glossary of Technical Terms 631 Bibliography 641 Index 643

Autorenportrait

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.