ADMN 3221H Chapter Notes - Chapter 9: Cash Flow, Commercial Paper, Book Value

• School: Trent University
• Department: Business Administration
• Course: ADMN 3221H
• Professor: Ebadul Islam

Document Summary

Derecognize investment, reporting gain/loss on disposal in net income: gain/loss is the difference between proceeds received for security and investment"s amortized cost at date of disposal. Sale of fv-oci investments (debt instruments: first we revalue the investment to fair value, then we recognize the sale, then we reclassify (recycle) the accumulated unrealized loss from oci to net income. Investments must be reviewed for possible impairment to ensure that future benefit justifies the valuation on the balance sheet: three different impairment models, incurred loss model, expected loss model, full fair value model. Impairment test carried out only if there is evidence of possible impairment. Investments are recognized as impaired when there is no longer reasonable assurance that the future cash flows associated with them will either be collected in their entirety or when due. Indicators of possible impairment include: significant financial difficulties, defaulting on interest/principal payments, major financial reorganization or bankruptcy, experiencing significant negative economic change.