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American option is greater than European Option
AFM
answered on 25-May-24 22:26
Hi sir, the question we solved is American put option(Abandonment option) and the value of the option is 52.7 million atleast.i will tell what i understood by the word "atleast" , please correct me if iam wrong. Normally BSM is used to compute European options value, here we used that even though it is an american option. So in European option value computing method i.e. BSM itself we are getting the option value as 52.7 million, in american option value computing method i.e. Binomial we will definitely get the option value more than 52.7 million. That's why we used "atleast"
latest answer
yes 100% right
B. Dinesh
CA Final
★ 3K+
1
315
Dividend treatment in Black scholes formula
AFM
answered on 25-May-24 20:11
Hi sir, in this question you said if there is a dividend it will get adjusted at two places i.e. In call option value formula at 'Spot' value and in d1 formula at 'r'. But in previous question no. 22 part 4, you said just to adjust the spot with PV of dividend and use the normal formula. by doing this we are giving the effect in Call option formula same as above. But the 2nd effect in d1 is not provided here na. Why is this sir ? Is it bcz its real options ?
latest answer
Ideally dividend should be adjusted at both places. ICAI has chosen to follow this weird method of adjusting dividend with spot in case of normal options and in both places in real options. They come up with their own explanations and interpretations
B. Dinesh
CA Final
★ 3K+
1
356
Illustration 4
Financial Reporting
answered on 27-May-24 14:54
In Illustration 4, if there is an impairment loss, Whether PPE to be reclassified as Investment Property at Carrying amount or Fair value ?
latest answer
If there is impairment loss, the asset will be valued at its recoverable amount (higher of fair value less costs to sell or value in use). This will be the carrying amount for reclassification. Please note that when the standard says that revaluation model is not permitted, it does not mean that impairment is not applicable.
Swathi S
CA Final
★ 975
1
156
Deferred Payment
Financial Reporting
answered on 27-May-24 15:03
What does it mean "Credit beyond normal terms"?
latest answer
Credit beyond normal terms refers to extending credit to a customer or borrower for a period longer than what is typically offered or agreed upon in the standard terms of sale or lending. So if normal credit period is 30 days and a 180 day credit period is provided, then its beyond normal terms.
Swathi S
CA Final
★ 975
1
174
Deferred Payment
Financial Reporting
answered on 27-May-24 15:20
If the interest cost meets the criteria under INDAS 23, whether the same shall be capitalized with Investment Property ?
latest answer
Yes.
Swathi S
CA Final
★ 975
1
167
Articleship
Others
answered on 07-Jun-24 13:58
Sir/mam can I do articles in Pondicherry?? Sir can you please refer some audit firms for me??
latest answer
Ok sir. Thank you
Priyanka R
CA Final
★ 20K+
5
312
Orientation course
Others
answered on 25-May-24 13:36
What are the things I want to take for orientation course
latest answer
Thanks for reply
SANTHOSH K
CA Final
★ 19K+
3
303
INDAS 16 VS INDAS 40
Financial Reporting
answered on 27-May-24 15:40
Here in Example, A ltd business is of renting out building. In such case, the building will be classified as PPE under Indas 16. Am I right? Then why has it been classified under INDAS 40?
latest answer
Thanks for bring to my notice. The example in Ind AS 16 could have been elaborated further. Office spaces was more in the context of office spaces with facilities. The company referred to in the example is WeWork. Will update that part appropriately. When the objective is to earn rentals or capital appreciation only, its IP.
Swathi S
CA Final
★ 975
4
228
Hotel vs Restaurant Example
Financial Reporting
answered on 25-May-24 08:53
In the Hotel vs Restaurant example, If the restaurants are given out on finance lease, then the asset will be derecognised in the books of lessor. Then how will it be classified under INDAS 40 as Investment property?
latest answer
Till it is let out, it will be classified under IP.
Swathi S
CA Final
★ 975
1
259
Investment Property
Financial Reporting
answered on 27-May-24 15:58
Case 1: There is a CA Academy. It rents out its building as hostel for the Students who are taking classes in their academy. Whether such building to be covered under INDAS 16 or INDAS 40? Case 2: There is a CA Academy. It rents out its building as hostel generally for all. (not only for its students).Whether such building to be covered under INDAS 16 or INDAS 40?
latest answer
In both cases when we say hostel, there would be additional service like food, laundry, wifi etc. Hence it would be for business purpose of providing services and Ind AS 16. however if it is only letting out of rooms with no additional services - Ind AS 40 - IP.
Swathi S
CA Final
★ 975
2
257