FAR january 2019 product errata

JANUARY 2019 WILEY CPAEXCEL EXAM REVIEW: FINANCIAL ACCOUNTING AND REPORTING
(Product Released October 16, 2018 for exam planners with exam sit dates after 12/10/18)

11/8

Overview--General Purpose Financial Statements

11/27 Speculation and Summary

Study Text for this lesson did
not appear in the print study
guide. PDF “FAR January
2019_Study Text_Overview-General Purpose Financial
Statements.pdf” has been
attached for download.
Study Text: Summary table
revised (rows deleted)
Video: Summary table revised
and audio/video removed
“What do you do with the
effective or ineffective portion
of those gains and losses...”
starting back at “are they going
to be in income or OCI.

OVERVIEW--GENERAL-PURPOSE FINANCIAL STATEMENTS (STUDY TEXT AND VIDEO)

SPECULATION AND SUMMARY (STUDY TEXT AND VIDEO)
Video:
Revised table appearing at end of lesson:
HEDGE OF:

Forecasted
Transaction: to
offset risk of
changes on forecasted
transaction

Firm Commitment: to
offset risk of rate changes
on a firm commitment

Type of Hedge

Cash flow

Fair value

Basic Approach

Treatment of Gain/Loss

Comments

Adjust
derivative to
fair value

Defer to other
comprehensive income
(OCI)

Gain/ loss reclassified
out of AOCI to net
income when
forecasted transaction
effects income

Recognize in current
income

The firm commitment is
recognized when
designated as the
hedged item

Adjust derivative
and firm
commitment to
fair value


Recognized Asset or
Liability: to offset risk of
changes in assets or
liabilities

Investment in AvailableFor-Sale (AFS) Securities:
to offset risk of exchange
rate changes on
investment
Net Investment

in Foreign Operation: to
offset risk of exchange
rate changes on
conversion of financial
statements
SPECULATION:
Entered for profit not
hedging a risk

Cash flow OR
fair value

Fair Value

Foreign
currency
hedge

None

Adjust derivative
and recognized
asset or liability
to fair value

Cash flow: defer to OCI

Adjust AFS
investment and
derivative to fair

value

Recognize in current
income

Adjust derivative
to fair value

Adjust carrying
value of
derivative to fair
value

Fair value: Recognize in
current income

Offset translation
adjustment; any gain more
than the translation
adjustment is reported in
net income

Recognize in current net
income

Must document the
risk being hedged as
cash flow or fair value

Only debt securities are

classified as AFS

None

Risk enhancing