AFA 300 Chapter Notes - Chapter 7: Debits And Credits, Bank Reconciliation, Securitization

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Chapter 7: wide range of financial statement elements, including cash, accounts/notes receivable, investments, and derivatives, these elements are financial assets because they are either, 1. Classification: amortized cost, fair value through other comprehensive income (fvoci, fair value through profit or loss (fvtpl) Two conditions must be met: objective is to hold financial asset to collect contractual cash flows, contractual cash flows are solely principal and interest. Two conditions must be met: objective is to hold financial asset to collect contractual cash flows and sell, contractual cash flows are solely principal and interest. Assets that meet the amortized cost criteria can nonetheless be classified as fvtpl if: loans and receivables will be sold in the short term, management wishes to avoid an accounting mismatch. Fair value, which is the transaction value and establishes the cost of the financial instrument; add. Amortized cost information in income statement and the difference between fair value and amortized cost in oci.

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