An entity purchased equity shares of another entity as a long-term investment rather than for trading purposes. The appropriate classification for this equity investment is as a financial asset at fair value through other comprehensive income. Financial assets measured at amortized cost must have contractual cash flows that are solely payments of principal and interest, while trading bonds and equity instruments held for trading are measured at fair value with unrealized gains/losses impacting net income.
An entity purchased equity shares of another entity as a long-term investment rather than for trading purposes. The appropriate classification for this equity investment is as a financial asset at fair value through other comprehensive income. Financial assets measured at amortized cost must have contractual cash flows that are solely payments of principal and interest, while trading bonds and equity instruments held for trading are measured at fair value with unrealized gains/losses impacting net income.
An entity purchased equity shares of another entity as a long-term investment rather than for trading purposes. The appropriate classification for this equity investment is as a financial asset at fair value through other comprehensive income. Financial assets measured at amortized cost must have contractual cash flows that are solely payments of principal and interest, while trading bonds and equity instruments held for trading are measured at fair value with unrealized gains/losses impacting net income.
An entity purchased equity shares of another entity as a long-term investment rather than for trading purposes. The appropriate classification for this equity investment is as a financial asset at fair value through other comprehensive income. Financial assets measured at amortized cost must have contractual cash flows that are solely payments of principal and interest, while trading bonds and equity instruments held for trading are measured at fair value with unrealized gains/losses impacting net income.
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1.
An entity purchased equity shares of another entity not for the purpose of selling and repurchasing but to be held as long-term investment. The most appropriate classification of the equity investment is financial asset at fair value through other comprehensive income
2. A financial asset shall be measured subsequently at amortized cost when the business model is to collect contractual cash flows that are solely payments of principal and interest.
3. It is any contract that evidences residual interest in the assets of an entity after deducting all of the liabilities. Equity instrument
4. A gain or loss on sale of trading bond investments is the difference between. Sale price and carrying amount
5. Trading bond investments are reported at Fair value
6. What is the best evidence of the fair value of a financial instrument?
The quoted price, if an active market exists for the financial instrument
7. If the financial asset is measured at fair value through profit or loss, transaction costs that are directly attributable to the acquisition of a financial asset shall be. Expensed when incurred
8. Depending on the business model for managing financial assets, an entity shall classify financial assets subsequent to initial recognition at either fair value or amortized cost
9. Which of the following is not a category of financial assets? Financial assets held for sale
10. The irrevocable election to present changes in fair value in other comprehensive income is applicable only to equity instrument that is not held for trading.
11. A financial instrument is any contract that gives rise to a financial asset of one entity and a financial liability or equity instrument of another entity
12. The entity purchased government bonds. The entity’s business model in managing financial assets is to collect contractual cash flows that are solely payments of principal and interest on the principal amount outstanding. Which of the following is the most appropriate classification for the investment in bonds? At amortized cost
13. Unrealized gains and losses on trading investments are reported in net income
14. All the following financial assets shall be measured at fair value through profit or loss, except
Financial assets held for trading
Debt investments irrevocably designated on initial recognition as at fair value through profit or loss Investments in quoted equity instruments Financial assets at amortized cost
15. Transaction costs include fees and commission paid to agent, levies by regulatory authorities, transfer taxes and duties
16. Accrued interest on bonds purchased between interest dates increases the amount a buyer must pay
17. As a rule, transaction costs that are directly attributable to the acquisition of a financial asset shall be
Capitalized as cost of the financial asset
18. Which of the following is correct with regard to trading bond investments?
Trading bond investments are held with the intention of selling them in a short period of time. Unrealized gains and losses are reported as part of net income Any discount or premium is not amortized
19. Which of the following statements is true concerning recognition of unrealized gain and loss on financial asset?
Unrealized gain and loss on financial asset held for trading shall be included in profit or loss. Unrealized gain and loss on financial asset measured at amortized cost are not recognized. Unrealized gain and loss on financial asset at FVOCI are not recognized in the income statement.
20. The contractual agreement between an investor and the bond issuer is contained in a formal document known as Bond indenture
