FAFVOCI

On January 1, 20x1, ABC Co. purchased 10,000 shares of XYZ, Inc. for ₱1,000,000. Commission paid to broker amounted to ₱15,000. Management made an irrevocable choice to subsequently measure the shares at fair value through other comprehensive income. On December 31, 20x1, the shares are quoted at ₱90 per share. On January 3, 20x2, all of the shares were sold at ₱105 per share. Commission paid for the sale amounted to ₱16,000. How much is the unrealized gain (loss) recognized in ABC’s 20x1 profit or loss?

• P115,000

• P(115,000)

• P(85,000)

• Zero

On January 1, 20x1, ABC Co. purchased 10,000 shares of XYZ, Inc. for ₱1,000,000. Commission paid to broker amounted to ₱15,000. Management made an irrevocable choice to subsequently measure the shares at fair value through other comprehensive income. On December 31, 20x1, the shares are quoted at ₱90 per share. On January 3, 20x2, all of the shares were sold at ₱105 per share. Commission paid for the sale amounted to ₱16,000. 1. How much is the unrealized gain (loss) recognized in ABC’s 20x1 other comprehensive income?

• P115,000

• P(115,000)

• P(85,000)

• Zero

The option to designate financial assets as FVPL and the election to classify financial assets at FVOCI are

• revocable

• mandatory

• irrevocable

• revocable under certain circumstances described under PFRS 9

Assuming a financial asset classified as FVOCI is remeasured to fair value at the end of reporting period, the gain or loss

• Must be recognized in net profit or loss.

• Must be recognized directly in equity.

• Must be recognized in other comprehensive income and accumulated separately in equity

• Must be recognized in profit or loss if the result is a loss and directly in equity if the result is gain.

Chowder Corporation invested ₱290,000 cash in equity securities classified as FVOCI in early December. On December 31, the quoted market price for these securities is ₱307,000. Which of the following statements is correct?

• Chowder's December income statement includes a ₱17,000 gain on investments.

• If Chowder sells these investments on January 2 for ₱300,000, it will report a loss of ₱7,000 in its income statement.

• Chowder's December 31 statement of financial position reports marketable securities at ₱307,000 and an unrealized holding gain on investments of ₱17,000.

• Chowder’s December 31 statement of financial position reports marketable securities at ₱307,000 and an Unrealizable Holding Gain on Investments of ₱7,000.

If an equity instrument classified as FVOCI is derecognized (sold) during the year

• The gain on sale is recognized directly in equity

• The cumulative unrealized gains or losses on the investment are transferred directly to profit or loss

• The gain or loss on the sale does not affect profit in the year of sale

• Profit in the year of sale is increased if the selling price exceeds the acquisition cost of the investment.

If a debt instrument classified as FVOCI is derecognized (sold) during the year

• The gain on sale is recognized directly in equity

• The cumulative unrealized gains or losses on the investment are transferred directly to profit or loss

• The gain or loss on the sale does not affect profit in the year of sale

• Profit in the year of sale is increased if the selling price exceeds the acquisition cost of the investment.

Financial assets classified as FVOCI are initially recognized at

• fair value

• cost

• fair value plus transaction costs

• invoice cost

At initial recognition, an entity may make an irrevocable election to present in other comprehensive income subsequent changes in the fair value of an investment in an equity instrument within the scope of IFRS 9 that is not held for trading. In accounting for such financial instruments, all of the following is true, except

• Amounts presented in other comprehensive income shall not be subsequently transferred to profit or loss.

• The entity may transfer any cumulative fair value gains or losses within equity.

• Dividends on such investments are recognized in profit or loss unless the dividend clearly represents arecovery of part of the cost of the investment.

• Cumulative fair value gains or losses are transferred to profit or loss.

The irrevocable election to present subsequent changes in fair value in other comprehensive income is applicable only to

• Investment in equity instrument that is not held for trading

• Investment in equity instrument that is held for trading

• Financial asset measured at fair value

• Financial asset measured at amortized cost