Question

1- 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.

Answer 1

solu tion Given that securoitization :- Secuoitization is the pooedurDe wheoe an maoketade financial instoument by iss uto designs a medging oo Pooling varoiaro finencial assets into one g secusitization offess oppootunities fos invenstoos and foees.up capital foo ooigånatoos, both of cwhich poomote liguidity in the maroket place. Secunitization is the financia Poactice of Pooling vomious tyres of contoactual debt suchag oesidential Mostgages icommeacíal mootgages ,auto loans.o coedit carod debt oblígation and selling theis ocalated cogh floos to thind Paroty investos as searoities. Secuoitics baked by mootgages oeceivable 16 called mostgages- baked Securoities, whitethosebauked by Othes types of geceivable re asstt -bakld securoities The few benefits fos secuoitztion poocess aot ) To manage the Opesating expenses 2) TO enhance the business acdiviting

TO enhance the liquidity. One of the bet exemple ot Secroitization is mOotgage Baked secusities. AS the ass4s is mostgages duroing this Poocess to bagoaw the loan. therse age sevesal accounting standrods ir di ffesent juoisdiction lik SFAS lU0 ag Pey Financial accounting standageds Bearsal, USA , IAS. 32/IAs 39 as Pes 1atesnational accoumting. standarods . IFRS 10 is application A pet inteoational Finanial ge Pooting standaods fos disclogcrse in fnancial statement. foo investoo iste The matn motivetion bootwes and to earon intetest on the fend lend. to the diveosify the Porot folio. thege atse some alteonative of this secoitizeati poocess such as Assets Baked-sacuroities, coveoed Bonds e The Jocronal entoies ase as follous. Loan Payable accamt D Loss at Financial assets at faio value TO Financia ASSets at falr value.