Beruflich Dokumente
Kultur Dokumente
Fourth Edition
Prepared by
R. Narayanaswamy Indian Institute of Management Bangalore
28 June 2011
Chapter 8 Investments
28 June 2011
Investments in Perspective
What is an investment? Why do firms hold investments? Types of investments Accounting for investments
28 June 2011
28 June 2011
Financial investments Financial assets at fair value through profit and loss account Held-to-maturity investments Loans and receivables Available-for-sale financial assets
28 June 2011
What are financial assets at fair value through profit and loss account? Held-for-trading Fair value accounting Initial measurement Subsequent measurement Recognition of gains and losses Financial assets carried at cost
28 June 2011 PHI Learning Private Limited New Delhi 6
Held-to-maturity Investments
What are held-to-maturity investments? Exclusions Initial measurement Amortized cost Effective interest method
Internal rate of return
Tainting provisions
28 June 2011 PHI Learning Private Limited New Delhi 7
What are loans and receivables? Exclusions Initial measurement Subsequent measurement Amortized cost
28 June 2011
What are available-for-sale financial assets? Initial measurement Subsequent measurement Other comprehensive income
28 June 2011
Categories of financial assets to be reviewed for impairment Objective evidence of impairment Measuring impairment
Financial assets carried at amortized cost Financial assets carried at cost Available-for-sale financial assets
28 June 2011
10
Reasons for equity investments for business purposes Operating investments vs. financial investments Accounting considerations Subsidiaries Joint ventures Associates
28 June 2011 PHI Learning Private Limited New Delhi 11
Subsidiaries
28 June 2011
12
Why do we need consolidated financial statements? Consolidation Steps in consolidation Non-controlling interests (or minority interests) Consolidation requirements Exemption from consolidation
28 June 2011 PHI Learning Private Limited New Delhi 13
Business Combination
What is a business combination? Acquirer Acquiree Acquisition Goodwill Acquisition method (or purchase method) Measuring non-controlling interests
28 June 2011 PHI Learning Private Limited New Delhi 14
28 June 2011
15
28 June 2011
16
28 June 2011
17
28 June 2011
18
28 June 2011
19
28 June 2011
20
Joint Ventures
What is a joint venture? Joint control Venturer Investor in a joint venture Jointly controlled operations Jointly controlled assets Jointly controlled entities Proportionate consolidation Proportionate consolidation requirements Exemption from proportionate consolidation
28 June 2011 PHI Learning Private Limited New Delhi 21
Associates
What is an associate? Significant influence Equity method Fair value adjustment Goodwill Exemption from the equity method
28 June 2011
22
28 June 2011
23
Investment Property
28 June 2011
24
28 June 2011
25