SSAP 24 Accounting for Investments in Securities

1
SSAP 24 Accounting for Investments in Securities

• Previous treatment
• Long-term securities cost or directors
  valuation
• Short-term securities lcm or marked-to-market

2
SSAP Treatment

• Three classes of securities, restrictions on
  transfer between classes.
• Held-to-maturity debt securities, carried at
  amortized cost.
• Benchmark treatment
• Investment securities (cost less provisions for
  diminution in value).
• Clearly identifiable longterm.
• Other investments (stated at fair value).
• Alternative treatment.
• Trading securities (stated at fair value with
  changes flowing through the PL as they arise).
• Non-trading securities (stated at fair value with
  use of a revaluation reserve).

3
Questions

• Why do you think there are two allowed
  treatments?
• Compare the standard with the previous treatment
  in terms of relevance and reliability.

4
More Questions

• What are the pros and cons of the new standard in
  terms of the measurement perspective?
• In the U.S., When mark-to-market was first
  proposed (similar to SSAP 24 benchmark) there was
  protest from companies management. Why? Why
  wasnt there any protest against SSAP 24 in HK?