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Fair Value of Unquoted Debt and Equity Instruments Under FRS 109

Complying to the New Requirements and Overcoming the Practical Challenges

Expert Speaker Ong Woon Pheng

$856.00 (including GST)

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EARLY BIRD SPECIAL: Save 10% when you register by 14 Nov 2018. Use code NOV18 at checkout.

Overview

FRS 109 Financial Instruments has replaced FRS 39 in 2018. FRS 109 covers, amongst other things, the classification and measurement requirements for financial assets and liabilities.

 

One of the significant changes is how unquoted equity instruments are now accounted for. Previously, reporting entities have the option to measure unquoted equity investments at cost where fair value cannot be determined reliably. However, under the new standard, investments in equity instruments must be measured at fair value under FRS 113 Fair Value Measurement.

 

This workshop will provide a concise coverage of fair valuing unquoted debt and equity instruments. An in-depth discussion on valuation approaches and methods will be included. In addition to equipping you with the technical skills and knowledge, this practical workshop will also allow you to apply key valuation concepts in practice by attempting a case study.

What You Will Learn  

At the end of this workshop, you will:

  • Understand how debt and equity investments are accounted for under FRS 109
  • Know how to identify the various types of valuation methods and select the most appropriate one
  • Learn how to apply commonly used valuation methods for debt and equity instruments and appraise its fair value

Programme Outline     

1. Introduction to FRS 109 and related standards

  • Effective date and transition
  • Scope exclusions from financial instrument standards
  • Classification of financial assets
  • Classification of debt and equity instruments under the old and new standard
  • Measurement of debt instruments
  • Measurement of equity instruments

 

2. Overview of Fair Value Measurement

  • Determine the financial asset that is being measured
  • Determine the valuation premise
  • Determine the market
  • Determine the valuation techniques for measuring fair value
  • Determine the fair value

 

3. Valuation Approaches & Methods

  • Principal valuation approaches
    • Market approach
    • Income approach
    • Cost approach
  • Selection process
  • Levels of value
  • Discount for lack of control (DLOC) and control premium
  • Control premium study
  • Factors influencing DLOC
  • Discount of lack of marketability (DLOM)
  • Pre-IPO study by Emory
  • Restricted stock studies
  • Factors influencing DLOM

 

4. Market Approach

  • Circumstances where market approach should be applied
  • Comparable transactions method (including prior transactions method and prior listings method)
  • Guideline publicly-traded comparable method
  • Key steps
  • Choosing publicly-traded comparables
  • Key valuation metrics
  • Comparative analysis
  • Adjustment of valuation metric

 

5. Income Approach

  • Circumstances where income approach should be applied
  • Discount cash flow method
  • Key steps
  • Type of cash flow
  • Cash flow forecast
  • Discount rate

 

6. Cost Approach

  • Circumstances where cost approach should be applied
  • Summation method
  • Key steps
  • Component assets and liabilities

 

7. Valuation Conclusion

  • Reconciliation values
  • Conclusion of value

 

8. Financial Liability

  • Definition of financial liability
  • Classification and measurement
  • Compound instruments

  

Participants are encouraged to bring along their financial calculators

 

This workshop qualifies for 7.0 CPE hours in Financial Reporting Standards and Pronouncements (Category 1).

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Expert Speaker

Ong Woon Pheng

CA (Singapore), FCCA, CFA, CFE, ICVS, ATP (Income Tax)

Woon Pheng is a Partner of Kudos CAS Public Accounting Corporation. He specialises in business valuation, valuation for FRS (including purchase price allocation, impairment review and valuation of complex financial instruments), financial and tax due diligence, divestment of business, mergers and acquisitions (M&A) advisory, fraud investigation, assessment of damages and expert witness.

Woon Pheng is involved in various roles in the Singapore CA Qualification. In 2015, he was conferred the Teaching Merit Award by SIM University. He also serves as a member in ISCA’s Investigation and Disciplinary Panel and the ACCA Singapore Professional Expert Forum.

Enquiries: 6211 3935; amy.wong@wolterskluwer.com / 6211 3939; sandi.teoh@wolterskluwer.com  

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