Accounting for Investments, Volume 2: Fixed Income Securities and Interest Rate Derivatives—A Practitioner's Guide

Contents

Foreword

Introduction

Preface

Acknowledgments

Chapter 1: Fixed Income Securities—Theory

Learning Objectives

Fixed Income Securities in General

Basics of the Bond Market

Definition of Financial Instruments

Categories of Financial Instruments—An Overview

Questions

Chapter 2: Fixed Income Securities—Fair Value through Profit or Loss

Learning Objectives

Meaning and Definition of Fixed Income Securities

Classification of Debt Securities as “Fair Value through Profit or Loss”

Accounting for Fixed Income Securities

Trade Life Cycle for Fixed Income Securities—Fair Value through Profit or Loss

Corporate Action

Additional Events in the Trade Life Cycle

Complete Solution to the Illustration

FX Revaluation and FX Translation Process

Distinction between Capital Gain and Currency Gain

Illustration 1: Investment in Bonds held for Trading Purposes

Solution to Illustration 1: Investment in Bonds held for Trading Purposes

Problem 1: Investment in Bonds (Trading) in Foreign Currency (AUD)

Accounting Entries in Functional Currency

Summary

Questions

Chapter 3: Fixed Income Securities—Available-for-Sale

Learning Objectives

Basic Understanding of Available-for-Sale (AFS)

Accounting for Fixed Income Securities Classified as Available-for-Sale

Option to Designate a Financial Asset at Fair Value through Profit or Loss

Accounting for Fixed Income Securities

Trade Life Cycle for Fixed Income Securities—Available-for-Sale

FX Translation on Available-for-Sale Securities

Impairment of Available-for-Sale ...