QUIZ 3 CFAS - MIDTERM

A financial instrument is any contract that gives rise to

• A financial asset

• A financial liability

• A financial asset of one entity and a financial liability of another entity

• A financial asset of one entity and a financial liability or equity instrument of another entity

Financial assets include all of the following except

• Prepaid expenses

• Cash in bank

• Trade accounts receivable

• Loans receivable

Financial liabilities include all of the following, except

• Trade accounts payable

• Notes payable

• Bonds payable

• Income tax payable

Which is not classified as a financial instrument?

• Convertible bond

• Foreign currency contract

• Warranty provision

• Loan receivable

Which of the following is not a relevant consideration whether to derecognize a financial liability?

• Whether the obligation has been discharged.

• Whether the obligation has been cancelled.

• Whether the obligation has expired.

• Whether substantially all the risks and rewards of ownership have been transferred.

The components of market risk are

• Credit risk and liquidity risk

• Currency risk and credit risk

• Interest rate risk and currency risk

• Liquidity risk and currency risk

A debt investment shall be measured subsequently at amortized cost

• By irrevocable election

• When the debt investment is managed and evaluated in a document risk management strategy

• When the debt investment is held for trading

• When the business model is to collect contractual cash flows that are solely payments of principal and interest

Debt investments not held for collection are reported at

• Amortized cost

• Fair value

• The lower of amortized cost and fair value

• Net realizable value

When a debt investment at amortized cost is reclassified to FVPL, the difference between the previous carrying amount and fair value at reclassification date is

• Recognized in profit or loss

• Not recognized

• Recognized in other comprehensive income

• Included in retained earnings

Fair value of an asset should be based upon

• The replacement cost of an asset.

• The price that would be received to sell the asset at the measurement date.

• The original cost of the asset.

• The price that would be paid to acquire the asset.