Accounting for complex investment transactions

Churyk, Natalie Tatiana; Stenka, Renata

doi:10.1016/j.jaccedu.2014.08.001

Cited by 4 publications

(2 citation statements)

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“…Therefore, the standard effectively determines the loss-absorption capacity of an economic entity. Despite its central role, the standard is, however, very difficult to apply, because of its widely criticized complexity (IASB, 2008; IASB, 2009) mainly originating from its casuistic nature 5 , which as a matter of fact struggles to capture all existing funding structures. Keeping this shortcoming in mind, we added specific indications of the relevant accounting standards and paragraphs to the case requirements to ensure that students spend time on the application of accounting standards instead of on finding the correct paragraphs.…”

Section: Regulatory Background and Literature Reviewmentioning

confidence: 99%

The hardest cycle climb at TCC: A financial instruments case

Boehm¹,

Voll²,

Zülch³

2017

COC

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TCC AG is a fast-growing bicycle production company and is headed by an ambitious top management team that wants to reinforce the firm’s expansion strategy with a sophisticated financial funding scheme. However, combined with an income decline, the financing strategy unexpectedly poses an existential threat to TCC. Complex accounting questions arise including the likely breach of a financial covenant, the detailed contractual clauses of a prospectus and the execution of a debt-for-equity swap. The underlying accounting requirements cover the recognition, the measurement and the disclosures of non-derivative financial instruments according to the International Financial Reporting Standards (IFRS). To foster a holistic understanding of financial instruments, the educational resource further combines the accounting concepts with related corporate finance theory. With this integrative approach, the case intends to encourage students’ critical reflection upon the far-reaching economic consequences resulting from accounting decisions.

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Section: Regulatory Background and Literature Reviewmentioning

confidence: 99%

The hardest cycle climb at TCC: A financial instruments case

Boehm¹,

Voll²,

Zülch³

2017

COC

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“…In other words, "teaching and learning accounting for consolidations is a challenging endeavor" (Murphy & McCarthy, 2010, p. 101). Although there is research on how to teach consolidated accounting (Murphy & McCarthy, 2010;Churyk & Stenka, 2014;Hsiao & Han, 2021), our goal is not to educate, but to renew the discussion on the specific issues of financial statement consolidation, especially the treatment of unrealized intra-group results.…”

Section: Introductionmentioning

confidence: 99%

Some Challenges in the Consolidation of Unrealized Intra-Group Profits and Losses

Sekerez,

Spasić

2023

FU Econ Org

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Procedures for eliminating internal results in practice may vary due to the different nature of the relationship between related parties, but also due to the vagueness of the accounting regulation, which opens up space for alternative procedures in practice. The ways of eliminating internal profits and losses differ primarily depending on whether full consolidation of financial statements or one-line consolidation, followed by the application of the equity method, is performed. At the same time, with both mentioned consolidation procedures, questions are raised regarding whether downstream and upstream transactions should have the same treatment, that is, whether the total internal result should be eliminated or only its part that is proportional to the ownership share. The aim of this paper consists in analyzing specific issues of eliminating internal results, while considering the current state and the possibility of improving accounting regulations in that field.

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