Chapter 11

Regular Way Purchase or Sale

A transaction in which financial assets are delivered within the standard settlement period.

T + 3

A trade settlement system where transactions settle three business days after the trade date (now mostly replaced by T+2 or T+1).

Marketplace

A venue where financial instruments, commodities, or securities are traded.

Trade Date Accounting

An accounting method where transactions are recorded on the date the trade is executed.

Settlement Date Accounting

An accounting method where transactions are recorded when the settlement occurs.

Trade Date

The date when a trade is executed.

Settlement Date

The date when a trade is finalized, and ownership transfers.

Fair Value Changes Between Trade Date and Settlement Date

The fluctuations in asset value between when a trade is executed and when it settles.

Reclassification

Changing the classification of a financial asset due to changes in the business model.

Senior Management

Executives responsible for strategic decision

Commercial Loans

Loans given by banks to businesses for commercial purposes.

Hold to Collect

A business model where financial assets are held to collect cash flows rather than for sale.

Prospectively

Applying accounting changes to future transactions only, without adjusting past financial statements.

Reclassification Date

The date on which a financial asset's classification is changed.

Asset Reclassification from Amortized Cost to FVTPL

Occurs when a company decides to manage financial assets for short

Business Asset Reclassification from FVTPL to Amortized Cost

Occurs when a company shifts assets from short

Reclassification from Amortized Cost to FVOCI

Happens when a company decides to collect cash flows but may also sell the assets.

Reclassification from FVOCI to Amortized Cost

Occurs when assets previously held for collecting and selling are now held strictly for collecting cash flows.

Reclassification from FVTPL to FVOCI

Occurs when a company shifts assets from short

Reclassification from FVOCI to FVTPL

Occurs when assets originally held for long

Debt Instruments

Financial assets representing borrowed funds, such as bonds or loans.

FVOCI Election

An option to classify certain equity investments at fair value through other comprehensive income (FVOCI).

FVOCI Mandatory

Certain financial assets must be classified at FVOCI based on accounting standards.

Dividends

A distribution of earnings to shareholders.

Impairment

A permanent reduction in the value of an asset due to economic or operational factors.

Cash Dividends

Payments made in cash to shareholders.

Property Dividends

Dividends paid in the form of assets instead of cash.

Share Dividends (Stock Dividends)

Dividends paid in additional shares rather than cash.

Dividend Revenue

Income earned from receiving dividends on investments.

Date of Declaration

The date when a company's board of directors formally announces a dividend.

Date of Record

The date when shareholders must own the stock to receive the dividend.

Ex

Dividend Date

Date of Distribution

The date when the dividend payment is made.

Dividend On

Refers to when a stock is still eligible for dividends.

Liquidating Dividends

A return of capital to shareholders, reducing the company's equity.

Dividend from Pre

Acquisition Retained Earnings

Non

Liquidating Portion

Liquidating Portion

The part of a dividend considered a return of capital.

Investment in Equity Securities Measured at Cost

An accounting approach where equity investments are recorded at original purchase price.

Dividends on Investments Measured at Cost

Dividends received from investments accounted for at cost.

FIFO Method

A cost allocation method where the first stocks purchased are the first ones sold or used.

Average Method

A cost allocation method where an average cost is assigned to stocks or investments.

Dividends Settled at the Option of the Holder

Dividends that allow shareholders to choose between cash or additional shares.

Shares in Lieu of Cash Dividend

Stock issued instead of cash for a dividend.

Cash in Lieu of Share Dividend

Cash payment given when fractional shares cannot be issued.

Share Split (Stock Split)

Increasing or decreasing the number of outstanding shares while adjusting the stock price.

Stock Split Up

A division of shares into a greater number of lower

Stock Split Down (Reverse Stock Split)

A consolidation of shares into a smaller number of higher

Aggregate Par Value

The total par value of all issued shares.

Accounting for Share Splits

Adjusting the number of shares and par value without affecting total equity.

Stock Rights

A privilege that allows existing shareholders to buy additional shares at a discounted price.

Preemptive Right or Right of Preemption

A shareholder's right to maintain their ownership percentage by purchasing new shares before the public.

Share Warrants

A financial instrument granting the right to buy company shares at a fixed price.

Date of Declaration

The date when a company's board of directors formally announces a dividend.

Date of Record

The date when shareholders must own the stock to receive the dividend.

Date of Issuance

The date when stock rights or warrants are officially granted.

Date of Exercise Period

The period when stock rights or warrants can be exercised.

Date of Stock Right Expiration

The last date when stock rights or warrants can be used.

Rights On

When a stock is still carrying the right to receive stock rights or dividends.

Embedded Derivative

A component of a financial contract that changes value based on an underlying asset or index.

Ex

Rights

Estimating the Fair Value of Stock Rights

Determining the value of stock rights based on market factors.

Theoretical or Parity Value of Stock Rights

The fair value of stock rights based on the price difference between the market price and the subscription price.

Investment in Bonds with Detachable Warrants

Bonds issued with attached warrants that allow the purchase of stock separately.