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Quiz

ACTG 2P32 Quiz: Derivatives

by OneClass2425523 , Spring 2018
2 Pages
91 Views
Spring 2018

Department
Accounting
Course Code
ACTG 2P32
Professor
Parunchana Pacharn
Study Guide
Quiz

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Derivatives
ASPE (sections 3856)
IFRS (IFRS 7,9, IAS 32,39)
Nature
A derivative is a contract
with all three of the
following characteristics:
(i) its value changes in
response to the change in a
specified interest rate,
financial instrument price,
commodity price, foreign
exchange rate, index of
prices or rates, a credit
rating or credit index, or
other variable (sometimes
called the "underlying"),
provided in the case of a
non-financial variable that
the variable is not specific
to a party to the contract;
(ii) it requires no initial net
investment or an initial net
investment that is smaller
than would be required for
other types of contracts that
would be expected to have
a similar response to
changes in market factors;
and
(iii) it is settled at a future
date
A financial instrument or
other contract within the
scope of this Standard with
all three of the following
characteristics.
(a) its value changes in
response to the change in a
specified interest rate,
financial instrument price,
commodity price, foreign
exchange rate, index of
prices or rates, credit rating
or credit index, or other
variable, provided in the case
of a non-financial variable
that the variable is not
specific to a party to the
contract (sometimes called
the 'underlying').
(b) it requires no initial net
investment or an initial net
investment that is smaller
than would be required for
other types of contracts that
would be expected to have a
similar response to changes
in market factors.
(c) it is settled at a future
date.
Recognition
An entity shall recognize a
financial asset or a financial
liability when the entity
becomes a party to the
contractual provisions of the
financial instrument.
Measurement Initial
When a financial asset is
originated or acquired or a
financial liability is issued or
assumed in an arm's length
transaction
recognized initially at their
fair value
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Description
Derivatives ASPE (sections 3856) IFRS (IFRS 7,9, IAS 32,39) Nature A derivative is a contract A financial instrument or with all three of the other contract within the following characteristics: scope of this Standard with (i) its value changes in all three of the following response to the change in a specified interest rate, characteristics. financial instrument price, commodity price, foreign (a) its value changes in response to the change in a exchange rate, index of prices or rates, a credit specified interest rate, rating or credit index, or financial instrument price, other variable (sometimes commodity price, foreign called the underlying), exchange rate, index of provided in the case of a nonfinancial variable that prices or rates, credit rating or credit index, or other the variable is not specific variable, provided in the case to a party to the contract; of a nonfinancial variable (ii) it requires no initial net investment or an initial net that the variable is not investment that is smaller specific to a party to the than would be required for contract (sometimes called other types of contracts that would be expected to have the underlying). a similar response to (b) it requires no initial net changes in market factors; investment or an initial net and (iii) it is settled at a future investment that is smaller date than would be required for other types of contracts that would be expected to have a similar response to changes in market factors. (c) it is settled at a future date. Recognition An entity shall recognize a financial asset or a financial liability when the entity becomes a party to the contractual provisions of the financial instrument. Measurement Initial When a financial asset is recognized initially at their originated or acquired or a fair value financial liability is issued or assumed in an arms length transaction
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