Accounting for Financial Instruments - IAS 32, IAS 39 and IFRS 7 Core Skills

In addition to your class tuition and study materials, you will receive the following:


Case Study

• Two sets of listed company financial statements to act as live case studies for the course

Exercises

• Calculation of debt and equity using split accounting
• Generation of principle disclosures attributable to hedge accounting
• Calculating the impact of an available-for-sale asset on financial performance

Other Extras

• Certificate of attendance

Level: Intermediate


Synopsis:
The recognition, measurement, presentation and disclosure of financial instruments has been viewed by many as the "final frontier" in providing the necessary information to investors and other stakeholders reviewing the published accounts of large corporate entities. Initial scrutiny of accounting practice began in the 1980s and has continued to the present day with the release of revised International Accounting Standards dedicated to this subject.


At the end of the course participants will be able to: Understand the commercial difficulties of determining fair values . Understand the basis on which current best practice has developed . Define a financial instrument . Understand key aspects of IAS 32 - Classifying debt and equity . Understand the key aspects of IAS 39 - Financial assets, financial liabilities, fair values, hedging principles . Understand the key disclosures on financial instruments and the significance of IFRS7 .


Prerequisites:
A basic familiarity with the contents and layout of financial statements.


Suitable For:
The course is also suitable for anyone who would like an introduction to financial instruments and the accounting issues they create.


Introduction

• A brave new world - the need for accounting guidance

Financial assets and liabilities

• Defining a financial instrument
• What constitutes a financial asset? FVTPLs, Held-to-maturity, Loans and receivables, Available-for-sale
• Loans and receivables
• What constitutes a financial liability? FVTPLs, other liabilities

Classification (IAS 32)

• Differentiating debt and equity
• Preference shares
• Convertible debt
• Treasury shares
• Contingent instruments

Derivatives

• The concept of a derivative
• Embedded derivatives

Recognition and derecognition

• The underlying principles - linked transactions
• The IAS 39 derecognition tree
• The transfer of risks and rewards

Measurement (IAS 39)

• Initial measurement - transaction costs
• Fair value - FVTPLs, available-for-sale
• Amortised cost - Loans and receivables, held-to-maturity
• Subsequent measurement
• Impairment - Indicators, recycling

Hedge accounting

• The underlying principle
• The accounting issues arising from: Fair value hedges, cash flow hedges, net investment hedges
• Determining hedge effectiveness

Current issues

• Is the drive towards fair values fuelling the credit crunch?