Exras

Question 1

On an individual parent company FS what would a subsidiary look like

Answer 1

Would be shown as a financial asset at original cost

Question 2

How would you perform a money market hedge where you are receiving an amount in foreign currency in 6 months time

Answer 2

Getting foreign asset, (do the opposite) so get a liability in foreign currency

Take out a loan in foreign currency THAT WILL GROW TO THE AMOUNT IN 6MONTHS. So discount it at the borrow rate.

Take the foreign money and bring it back to UK

Put the money in a UK bank for 6 months to grow with interest

In 6 months use the amount received to pay off the loan in foreign currency and you are left with the amount in the UK bank

Question 3

What is a good way of identifying inefficiencies in a production process?

What does this allow?

Answer 3

BPR (business process re-engineering)

Allows company to improve efficiency and help organization lower costs

Question 4

When should derecognition of a financial asset take place under IFRS 9

Answer 4

When the seller has transferred SUBSTANTIALLY ALL the assets risks and rewards