ACCTG 26_SEMIFINAL EXAM

Which of the following is not a category of financial assets?

• Financial Assets at fair value through profit or loss

• Financial Assets at fair value through other comprehensive income

• Financial Assets at amortized cost

• Financial Assets Held for Sale

All of the following financial assets shall be measured at fair value through profit or loss, except

• Financial assets held for trading

• Financial Assets designated on initial recognition as at fair value through profit or loss

• Investments in quoted equity instruments

• Financial Assets at amortized costs

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

• Expensed when incurred

• charged to retained earnings

• included as a component of other comprehensive income

Depending on the business model for managing financial assets, an entity shall classify financial assets subsequent to initial recognition at

• Fair value

• Amortized cost

• Either fair value or amortized cost

• Neither fair value nor amortized cost

Unrealized gains and losses on financial assets measured at amortized cost shall be included as a component of other comprehensive income

• TRUE

• FALSE

When an entity reclassifies a financial asset at amortized cost to the financial asset at fair value, the fair value is determined at the reclassification date, and the difference between the previous carrying amount and fair value

• is included in profit or loss

• is included in other comprehensive income

• is included in retained earnings

• is not recognized

What is the " reclassification date" for purposes of reclassifying financial assets?

• end of the current reporting period

• First day of the next reporting period following the change in business model

• Dat when management decided to change the business model for managing financial assets

• no definition of reclassification date as this would depend on the judgment of management

An entity purchased equity shares in another entity with the intention of holding this investment over the long term. what is the most appropriate classification of this equity investment?

• At fair value through profit or loss

• held for trading

• at fair value through other comprehensive income

• amortized cost

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?

• held for trading

• at fair value through profit or loss

• at amortized cost

• at fair value through other comprehensive income

An impairment loss is a difference between the carrying amount of the investment and the

• expected cash flows

• present value of the expected cash flows

• contractual cash flows

• present value of the contractual cash flows