From the category archives:

Accounting Standards

Financial Instruments as per Ind ASThe book covers financial instruments from the perspective of the issuer as well as the investor. It explains the concept of recognition, classification and subsequent measurement of financial assets and liabilities, de-recognition of financial assets and liabilities and impairment model. It also covers fair value and cash flow hedge accounting, disclosures required for financial instruments, fair value concepts and effects of fluctuations in foreign exchange. It includes lucid commentary on Financial Instruments as per Ind AS, discussing Ind AS 32, Ind AS 109, Ind AS 107, and some portions of Ind AS 113 and Ind AS 21. As we all know, Financial Instruments accounting is a new concept in India. The Indian Accounting Standards relating to financial instruments are quite complex and voluminous. The said standards (along with other 34 standards) are applicable from 1st April 2016 for Phase 1 companies, while the rest of the world would be adopting the equivalent standard IFRS 9 only from 1st Jan 2018. This book includes the basics of financial instruments and also dwells deep into the Indian Accounting Standards mentioned above with several practical case studies along with solutions for the same. Key Features Discussion based on Ind AS 32, 109, 107, 113 & 21 Elucidating topics with practical case studies Includes lucid explanation on hedge Accounting A guide to the certificate course in Ind AS (ICAI) and Dip in IFRS (ACCA, UK).

See: LearnAccountingStandards

See: LearnIndAS

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FASB Requirements

by R. Krishnaswamy on April 5, 2010

Para 44 of FAS87 states that the assumed discount rates shall reflect the rates at which the pension benefits could be effectively settled.  FAS 87 recommends the following  approaches for estimating the discount rates
The rates  implicit in the current prices of annuity contracts that could be used to effect settlement of the obligation; (or)
The rates of return on high quality fixed income investments (double A rated bonds) currently available and expected to be available during the period to maturity of the pension benefits

If the second approach  is used for determining the assumed discount rates, then FAS87 (Para 44A) clarifies that these high quality debt instruments should be high quality zero coupon bonds whose maturity dates and amounts would be the same as the timing and amount of expected future benefit payments.

If coupon bearing bonds are used to determine discount rates, then these  discount rates must incorporate the expected reinvestment rates available in the future.

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AS 15 and IAS 19 Requirements

April 5, 2010

Para 78 AS15R [Accounting Standard 15 (Revised)] states that the rate used to discount post employment benefit obligations (both funded and unfunded) should be determined by reference to market yields at the balance sheet date on government bonds.  The currency and term of the government bonds should be consistent with the currency and estimated term […]

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