Question

Now YOU Try EXAMPLE We're considering We're considering an investment in a key supplier through a stock-for-stock exchange. How would this How would this transaction affect our financial statements? transaction affect our financial statements? Accounting Accounting Team Management Management Team

The following depicts an example in which management asks the accounting team to evaluate the financial statement impacts of a proposed transaction. What should be filled in the blanks shown in the image above?

Answer 1

Various examples for this come to mind. I am listing THREE below, let me know in case you need any further assistance

1. We're considering raising funds for expansion by issuing fully convertible Bonds at a premium price. How would this transaction affect our financial statements?
(Note- in this case, the value would be segregated into equity as well as debt. So accounting for this is challenging and fun at the same time)

2. We're considering acquisition of a subsidiary located in Asia. How would this transaction affect our financial statements?
(Note- this transaction would involve translation of amounts of foreign subsidiary using the relevant accounting principles and then treating the same in accordance)

3. We're considering hedging our forex transactions by taking forward contracts as well as swaps. How would this transaction affect our financial statements?
(Note- this transaction would involve unrealized gain / loss at year end dates. )