Question

What do you mean securitization? Is there any accounting disclosures for securitization in the context of Local accounting standards? What are the motivations for and alternatives to securitization? Also, discuss the fair value concept of transferor’s journal entry for a transfer of financial assets in your own words.

Answer 1

SOL! Securitization' is the process securization of turning assets into securities. An Asset that takes longer to convert to cash and will likely sell for a Price lower than market value is called an illizuid asset For clample a money market account is an account cash at a bank to store used securization is the financial practice of vosious types of contractual debt such as Pooling residential mortages. Commercial mortages, auto loans 00 credit card debt obligation and sellings their related cash flows to third poroty investors as through see which may be described as bonds, pass Securities Yes, the accounting standard 30 based on las 393 for securitization.

motives for securitization. l. Dis advantage to Issues: * may reduces Portfolio quality . - * costs. size limitations Risks. 2. Advantage to Issues: * Reducing bending cast * Reduces Asset liability mismatch. * Lower capital Requirement. * Locking in probit. * Transbeo Risks. * obf balance sheet * Admissibility. 3. Risks to investors a controcteau agreements * serviced Risk K moral nazards. 5) L ruidity risks. * default / credit.

-> Event Risles * currency i derest rate flucation, prepayment I early amortization 19e investment, Fair value concept refers the value of financial Assets. Should be at market value or less value in comparison to original values. d this help the business to ascertain toue position of the business.