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CFA Level 2: Financial Reporting Part 2 – Introduction

Welcome to the belly of the financial reporting beast.  Candidates are expected to understand accounting for: intercorporate investments, retirement (or post-employment) benefits, stock (or share) based compensation, and multi-national operations.  Compared to the other sections this is one of the longest sections.  The good news is that the math is not particularly complicated, but there are a number of decision rules and procedural steps to learn.  This series is designed to provide a framework of understanding for the aforementioned financial accounting issues.  However, to be fully prepared for the exam, candidates will need to repeatedly work through examples with this framework in order to be fully prepared for item sets on the exam.  It is reasonable to expect that each of these items will be touched upon in the exam.

Definitions

Fair Value: Commonly synonymous for an asset’s market value, however some assets do not have a readily observable market price, which increases the subjectivity in determining the asset’s fair value.

Financial Statements: Refers to a company’s: income statement, balance sheet, statement of cash flows, and/or statement of changes in owner’s equity.  There will be several references to the statement of changes in owner’s equity in this section.

Material:

This series will discuss the following material:

I.          Intercorporate Investments Accounting

II.        Retirement (Post-employment) Compensation and Benefits Accounting

III.       Stock (Share) Based Compensation Accounting

IV.       Financial Statement Consolidation of Multinational Operations

01
CFA Level 2: Financial Reporting Part 2 – Introduction
02
Intercorporate Investments Accounting - Ownership Categories
03
Minority Passive Investments – Accounting Classes
04
Minority Active Investments and the Equity Method for Financial Reporting
05
Joint Venture Investments
06
Controlling Interest Investments: Accounting for Business Combinations
07
Purchase Method of Accounting for Controlling Interest Investments or Acquisitions
08
Pooling of Interests Method to Account for Controlling Interest Investments
09
Purchase Method vs. Pooling of Interest Method
10
Acquisition Method to Account for Controlling Interest Investments
11
GAAP Purchase Method, IFRS Purchase Method, and GAAP Acquisition Method Accounting
12
Variable Interest Entities (VIEs) and Special Purpose Entities (SPEs)
13
Defined Benefits Plans vs. Defined Contribution Plans
14
Measuring the Defined Benefit Obligation
15
Pension Expense (both GAAP & IFRS) for the Income Statement
16
Defined Benefit Plans & the Company Balance Sheet
17
The Role of Actuarial Assumptions in DB Plan Accounting
18
Economic Pension Expense
19
Pensions and the Statement of Cash Flows
20
Accounting for Stock (or Share) Based Compensation
21
Financial Statement Consolidation of Multinational Operations
22
Consolidation: Presentation Currency vs. Functional Currency vs. Local Currency
23
Foreign Currency Translation
24
Temporal Method for Translation of Foreign Statements
25
Current Rate Method for Translation of Foreign Statements
26
Consolidating Financial Statements: Determining the Functional Currency
27
Translation Methods and Financial Statement Effects
28
Accounting for Subsidiaries in Hyperinflationary Economies
29
CFA Level 2: Financial Reporting 2 - Recommendations
30
MBS Weighted Average Life

Topics

Financial Analysis
Financial Statements

Related Groups

Finance Concepts