Covenant and Replacement cost: Difference between pages

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1.A formal legal agreement to take, or not to take, certain actions.
(RC).


1. ''Derivatives''


2. In loan documentation, a promise given by the borrower to take, or not to take, relevant actions.<ref>http://www.treasurers.org/node/8842</ref>  For example, a ''financial covenant'' to maintain a minimum ratio of net worth to debt.
The current fair value of a derivatives contract, representing the amount that would need to be paid to replace the contract now, in the event of the failure of the derivative counterparty.




3. In relation to pension funds, the credit strength of the sponsoring employer and its commitment to the pension fund.
2. ''Financial reporting''
 
In current cost accounting, the current market cost of replacing inputs, rather than their historical cost.




== See also ==
== See also ==
* [[Accounting exposure]]
* [[Counterparty]]
* [[Asset cover]]
* [[Current cost accounting]]
* [[Event of default]]
* [[Derivative instrument]]
* [[Financial covenant]]
* [[Fair value]]
* [[Incurrence covenant]]
* [[Potential Future Exposure]]
* [[Interest cover]]
* [[Replacement cost risk]]
* [[Loan agreement]]
* [[Maintenance covenant]]
* [[Net worth]]
* [[Restrictive covenant]]
* [[Waiver]]
 
 
==References==
<references/> Treasury Essentials: Covenants, The Treasurer, March 2013
 
 
==Other links==
[http://www.treasurers.org/node/5225 Loan agreement covenant performance, Will Spinney, ACT 2009]

Revision as of 14:28, 13 November 2016

(RC).

1. Derivatives

The current fair value of a derivatives contract, representing the amount that would need to be paid to replace the contract now, in the event of the failure of the derivative counterparty.


2. Financial reporting

In current cost accounting, the current market cost of replacing inputs, rather than their historical cost.


See also