Question Three: 19-50. Accounting for Passive Investments (L01) With assets of $675 billion (AUS), Westpac Banking Corporation is one of Australia's largest banks. The company provides a broad range of banking and financial services including retail, business and institutional banking and wealth management services. The company has branches throughout Austra- lia, New Zealand and the Pacific region and employs 34,000 people. The company's September 30, 2012, fiscal year end balance sheet (IFRS) reported the following: (In $AUS millions) 2012 Assets Cash and balances with central banks..... Receivables due from other financial institutions.. Derivative financial instruments . . . . . . . Trading securities ............ Other financial assets designated at fair value. Available-for-sale securities ... Loans-housing and personal .... Loans-business ................ Life insurance assets ..... Regulatory deposits with central banks overseas Deferred tax assets. Goodwill and other intangible assets. Property, plant and equipment. ....... Other assets ........ Total assets. ....... $ 12,523 10,228 35,489 44,603 2,664 24,472 365,221 149,224 8,240 1,893 2,176 12,134 1,137 4,961 . . . . . . . . . . . . . . . . . . . . $674,965 Required a. Westpac reports trading securities of $44,603 million and available-for-sale securities of $24,472 million. Are these substantial assets for the bank? b. At what amount does Westpac Banking Corporation report its trading securities on its balance sheets for 2012? c. Assume that the historic cost of the available-for-sale securities was $24,390 at September 30, 2012. Did Westpac have an unrealized gain or loss on these securities? d. Explain how the unrealized gain or loss on available-for-sale securities affects Westpac's balance sheet and income statement in 2012. e. Assume that the historic cost of the trading securities was $45.812 at September 30, 2012. Did Westpac have an unrealized gain or loss on these securities? f. Explain how the unrealized gain or loss on trading securities affects Westpac's balance sheet and income statement in 2012. Question Three: 19-50. Accounting for Passive Investments (L01) With assets of $675 billion (AUS), Westpac Banking Corporation is one of Australia's largest banks. The company provides a broad range of banking and financial services including retail, business and institutional banking and wealth management services. The company has branches throughout Austra- lia, New Zealand and the Pacific region and employs 34,000 people. The company's September 30, 2012, fiscal year end balance sheet (IFRS) reported the following: (In $AUS millions) 2012 Assets Cash and balances with central banks..... Receivables due from other financial institutions.. Derivative financial instruments . . . . . . . Trading securities ............ Other financial assets designated at fair value. Available-for-sale securities ... Loans-housing and personal .... Loans-business ................ Life insurance assets ..... Regulatory deposits with central banks overseas Deferred tax assets. Goodwill and other intangible assets. Property, plant and equipment. ....... Other assets ........ Total assets. ....... $ 12,523 10,228 35,489 44,603 2,664 24,472 365,221 149,224 8,240 1,893 2,176 12,134 1,137 4,961 . . . . . . . . . . . . . . . . . . . . $674,965 Required a. Westpac reports trading securities of $44,603 million and available-for-sale securities of $24,472 million. Are these substantial assets for the bank? b. At what amount does Westpac Banking Corporation report its trading securities on its balance sheets for 2012? c. Assume that the historic cost of the available-for-sale securities was $24,390 at September 30, 2012. Did Westpac have an unrealized gain or loss on these securities? d. Explain how the unrealized gain or loss on available-for-sale securities affects Westpac's balance sheet and income statement in 2012. e. Assume that the historic cost of the trading securities was $45.812 at September 30, 2012. Did Westpac have an unrealized gain or loss on these securities? f. Explain how the unrealized gain or loss on trading securities affects Westpac's balance sheet and income statement in 2012
