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- 1. Multiple Choice
According to IFRS 9, on initial recognition, the entity has the option of designating financial assets to be measured at FVPL
if doing so provides more relevant and more reliable information
if doing so reduces “accounting mismatch”
if it is required by “shadow accounting”
at the entity’s management absolute discretion
- 2. Multiple Choice
Under IFRS 9, financial assets at fair value through profit or loss are
held for trading securities
designated financial assets
FVOCI
both held for trading securities and designated financial assets
- 3. Multiple Choice
Financial assets are initially measured
at fair value
at fair value plus direct transaction costs
at fair value plus direct transaction costs, except in the case of financial assets at fair value through profit orloss where direct transaction costs are expensed immediately
at cost, in cases where the quoted prices of the financial assets are indeterminable
- 4. Multiple Choice
Subsequent changes in fair values of a financial asset classified as fair value through profit or loss are
recognized in profit or loss
recognized in total comprehensive income
recognized in other comprehensive income
ignored
- 5. Multiple Choice
An entity sells its investment in FVPL during the year. The realized gain or loss on the sale is computed as
the difference between the sale price and the carrying amount of the investment as at the date of sale
the difference between the sale price and the original acquisition cost of the investment
the difference between the net proceeds received from the sale and the carrying amount of the investment as at the date of sale
the difference between the net proceeds received from the sale and the carrying amount of the investment as at the date of sale adjusted for any accumulated fair value gains or losses recognized since the investment was acquired
- 6. Multiple Choice
Financial assets at fair value through profit or loss include
I. Financial assets whose business model for managing the asset are held for “trading”
II. Financial assets that are “designated” on initial recognition as at fair value through profit or loss.
I only
II only
Both I and II
Neither I nor II
- 7. Multiple Choice
If the financial asset is measured at fair value through profit or loss, transaction costs directly attributable to the acquisition shall be
Capitalized as cost of the financial asset
Expensed immediately when incurred
Deferred and amortized over a reasonable period
Included as component of other comprehensive income
- 8. Multiple Choice
Which of the following statements is true concerning recognition of unrealized gains and losses on financial assets?
I. Unrealized gains and losses on financial assets held for trading shall be included in profit or loss.
II. Unrealized gains and losses on financial assets measured at amortized cost shall be included as component of other comprehensive income.
I only
II only
Both I and II
Neither I nor II
- 9. Multiple Choice
On October 1, 2019, Fluorine Company, with a business model of trading debt securities, purchased a P2,000,000 face value 9% debt instruments, with a remaining term of 2 years and three months for P2,174,867, which included accrued interest of P135,000. The prevailing market rate of interest at the time of acquisition was 8%. Interest is being received every December 31. On December 31, the fair market value of the instruments is P2,072,321 based on prevailing market rate of 7%. What amount of unrealized gain or loss should Fluorine Company report in its December 31, 2019 profit or loss?
None
P32,454
P102,546
P135,000
- 10. Multiple Choice
On January 1, 2019, Gold Company purchased the debt instruments of Helium Company with a face value of P5,000,000 bearing interest rate of 8% for P4,621,006 to yield 10% interest per year. The bonds mature on January 1, 2024 and pay interest annually on December 31. On December 31, 2019, the fair value of the investment is P4,838,014 which is based on the prevailing market rate of 9%. If the company’s business model has the objective of trading and making a profit from changes in the fair value of the securities, what amount of unrealized gain or loss should the company disclose in the December 31. 2019 profit or loss?
None
P26,559 unrealized gain
P154,907 unrealized gain
P217,008 unrealized gain
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