A New Approach to Accounting for Portfolio Investments

Article Abstract:

A study conducted by the Canadian Institute of Chartered Accountants to determine the existence of a common method of accounting for investment portfolios was commissioned in 1980 and is due to be released in April 1984. Considered in the study are the following: 1) the types of investments considered to be portfolio investments, 2) the method of classifying the investments on the statement - long or short-term, 3) the basis of valuation, 4) the method of recording income and 5) financial statement disclosure. The study group surveyed literature, prepared a draft study after discussion and submitted it to groups and individuals for comment. Portfolio investments are long-term and passive and include fixed-term and equity investments. Different methods can be used on balance sheet and income statement. Three methods of accounting are used for fixed-term investments: 1) the cost (or realization) method, 2) the market method and 3) the deferral and amortization method, with the third being the most neutral and appropriate. In equity investments, gains and losses are most important. Of the equity methods, the moving-average market method, even with its shortcomings, is most fair in accounting for unrealized gains and losses on equity investments. Further research is necessary. The conclusion on accounting for equity investments is controversial.

Research, Canada, Accounting and auditing

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UFE syllabus changes enacted

Article Abstract:

Amendments for the 1993 Uniform Final Examination for chartered accountants have been approved. The Interprovincial Education Committee has studied the revised Syllabus for Entry to the CharteredAccountancy Profession and considered it ready for implementation. The changes were generated by demand based on evaluation from the 1989 Report to the Uniform Final Examination Study Group.

Tests, problems and exercises, Education, Accountants

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