Financial Instruments

Equity is defined by which Accounting Standard and what is the definition of Equity ( mark all possible answers)

• IAS 32

• IFRS 9

• any contract that evidences a residual interest in the assets of an entity after deducting all of its liabilities

• A contractual right to receive cash or another financial asset

A financial asset is:

( mark all possible answers)

• An Equity instrument of another entity

• Cash

• A contractual right to exchange financial assets or liabilities on UNfavourable terms

• A contractual right to exchange financial assets or liabilities on favourable terms

• A contractual right to receive cash or another financial asset

A financial liability is

( mark all possible answers)

• contractual obligation to

  exchange financial assets or liabilities on

  
  

  unfavourable terms

• contractual obligation to

  exchange financial assets or liabilities on

  
  

  favourable terms

• A contract under which an entity is obliged to issue a VARIABLE number of its own

  
  

  equity instruments.

• A contract under which an entity is obliged to issue a FIXED number of its own

  
  

  equity instruments.

7% Bond is issued by a Company for $1,200 with a par value of $1,000 having a market rate of interest of 5%.

1. How much is interest paid ?

2. How much is the expense in the income statement?

• $84 and 60

• $84 and $50

• $70 and $60

• $70 and $50

7% Bond is issued by a Company for $1,200 with a par value of $1,000 having a market rate of interest of 5%.

what is the carrying value of the bond measured at amortized cost at year end?

• $1,234

• $1,166

• $980

• $1,020

The financial asset is measured at amortised cost if:

• The objective of the business model within which the asset is held is to hold the asset to maturity to collect the contractual cash flows

• The contractual terms of the asset give rise to cash flows that are solely repayments of principal and interest of the principal amount outstanding.

• the objective of the business model is also to increase returns when possible by selling the asset

Investment in Debt can be classified as :

• Amortised cost

• Fair value through OCI or Amortised cost

• Fair value through profit or loss.

• All of the above