Intro to PFRS 9

Which of the following is measured at fair value with fair value changes recognized in profit or loss?

• Held to maturity investments

• Financial assets designated at FVPL

• FVOCI

• All of these

If the entity’s business model’s objective is to hold assets in order to collect contractual cash flows and cash flows are solely payments of principal and interest on the principal amount outstanding, the financial asset is classified

• according to management’s intention of holding the securities.

• as financial asset measured at amortized cost.

• as financial asset measured at fair value through other comprehensive income.

• any of these

Which of the following is not a financial asset?

• Cash

• Receivable

• Inventory

• Investment in associate

Which of the following is not a financial instrument?

• Accounts receivable

• Investment in shares of stocks

• Accounts payable

• All of these are financial instruments

Which of the following are not considered transaction costs or costs to sell?

• commissions to brokers

• levies by regulatory agencies and commodity exchanges

• transfer taxes and duties

• transport costs

Regarding PFRS 9, which of the following is incorrect?

• Only equity instruments of other entities can qualify as financial assets. The entity’s own equity instruments are not financial assets

• The term financial instrument refers to both financial assets and financial liabilities

• Equity instruments refer only to those instruments issued by a corporation. Other types of organizations cannot issue equity instruments.

• The term financial instruments include a vast array of instruments, including petty cash fund.

What is the principle for recognition of a financial asset or a financial liability in PFRS 9?

• A financial asset is recognized when, and only when, it is probable that future economic benefits will flow to the entity and the cost or value of the instrument can be measured reliably.

• A financial asset is recognized when, and only when, the entity obtains control of the instrument and has the ability to dispose of the financial asset independent of the actions of others.

• A financial asset is recognized when, and only when, the entity obtains the risks and rewards of ownership of the financial asset and has the ability to dispose the financial asset.

• A financial asset is recognized when, and only when, the entity becomes a party to the contractual provisions of the instrument.

When the fair value of an entity's portfolio of FVPL securities is lower than its cost the difference is

• Accounted for as liability

• Disclosed and described in a note to the financial statements but not accounted for

• Accounted for as a valuation allowance deducted from the asset to which it relates

• Accounted for as an addition in the equity section of the statement of financial position

Which of the following is correct regarding classifications of financial assets?

• An entity cannot designate a debt security at FVPL if it otherwise qualifies for recognition as held for trading

• An entity cannot designate an equity security at FVPL if it otherwise qualifies for recognition as held for trading

• An entity cannot elect to classify an equity security at FVOCI if it otherwise qualifies for recognition as held for trading

• An entity can elect to classify an equity security at FVOCI even if the security qualifies for recognition as held for trading

The two main classifications of financial assets under PFRS 9 are

• debt and equity instruments

• fair value and amortized cost

• financial assets and financial liabilities

• FVPL and FVOCI