College of Administrative and Financial Sciences Assignment 2 Deadline: 2/11/2019 @ 23:59 Course Name: Accounting of Financial Institutions Student’s Name: Course Code: ACCT 405 Student’s ID Number: Semester: I CRN:10515 Academic Year: 2019-20-1440/1441 H For Instructor’s Use only Instructor’s Name: Students’ Grade: Marks Obtained/Out of Level of Marks: High/Middle/Low Instructions – PLEASE READ THEM CAREFULLY • The Assignment must be submitted on Blackboard (WORD format only) via allocated folder. • Assignments submitted through email will not be accepted. • Students are advised to make their work clear and well presented; marks may be reduced for poor presentation. This includes filling your information on the cover page. • Students must mention question number clearly in their answer. • Late submission will NOT be accepted. • Avoid plagiarism, the work should be in your own words, copying from students or other resources without proper referencing will result in ZERO marks. No exceptions. • All answered must be typed using Times New Roman (size 12, double-spaced) font. No pictures containing text will be accepted and will be considered plagiarism). • Submissions without this cover page will NOT be accepted. Assignment 2-MARKS -5 Question no 1Accounting for credit risky financial instruments not recognized at observed market value generally involves estimating expected future Credit Risks and Losses with reference to its “Disclosers”. Explain this statement “Disclosers”. in your own words with statistical examples of the data from the Saudi Local Banks or Financial Institutions. (Case Study) (1.5 marks) Answer: 2-Users of financial reports with a robust understanding of “How Fair Value Accounting” works in theory and in relatively simple contexts: How users can analyze the information with context to Local Saudi Banks as well as local financial Institution. “Fair Value Accounting and Disclosures” to assess their a) Solvency and profitability better than is possible using amortized cost accounting information (use solvency and profitability ratio from balance sheet) b) Discretionary “Gain Trading” (use disclosures and the assessment of Gain Trading) Required a) Calculate Solvency and Profitability ratio from balance sheet of any Saudi Local banks or financial institutions b) Calculate Gain or Losses from securities – use Saudi Local banks or financial institutions Hints to understand the above question (That is timing of the sale of securities and other financial instruments recognized at amortized cost to realize gain or losses and thereby manage income and book value) – Use the Financial Statements of the Bank for explanation -Balance sheet for statistical example (case study) 2 marks Answer 3-Morgtaga banking is primarily a fee based rather than interest rate spread –based business. You are required to describe and explain in brief from the structure of mortgage bank’s Balance sheet, Income statements and Cash flow statements respectively from the statistical information of Saudi Local banks (mortgages banks) or financial institutions. (Case Study) (1.5 marks)
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