Which of the following statements is incorrect?a. The PAS 32 definition of "equity" reflects the basicaccounting equation of "Assets - Liabilities = Equity."b. According to PAS 32, a contract is an equity instrument ifit may result in the receipt or delivery of the entity's ownequity instruments.C. Entity A issues a compound financial instrument for P1M.If the fair value of the liability component without theequity feature is P.8M, the value to be assigned to theequity component is P.2M.d. An intention to settle a financial asset and a financialliability on a net basis without the legal right to do so isnot sufficient to justify offsetting because the rights andobligations associated with the individual financial assetand financial liability remain unaltered.%3D

Compound Financial Instrument: A compound financial instrument is a type of financial instruments…

3. Which of the following statements is in a. The PAS 32 definition of "equ accounting equation of "Assets -L b. According to PAS 32, a contract is it may result in the receipt or deli equity instruments. C. Entity A issues a compound finan If the fair value of the liability equity feature is .8M, the valu equity component is P.2M. d. An intention to settle a financia liability on a net basis without th

3. Which of the following statements is in a. The PAS 32 definition of "equ accounting equation of "Assets -L b. According to PAS 32, a contract is it may result in the receipt or deli equity instruments. C. Entity A issues a compound finan If the fair value of the liability equity feature is .8M, the valu equity component is P.2M. d. An intention to settle a financia liability on a net basis without th

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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PROBLE other financial assets. associates and joint ventures. delivering cash or another financial asset. However, Entity A's not sufficient to justify offsetting because the rights and d. An intention to settle a financial asset and a financial 2 A contract that evidences a residual interest in the entity's assets after deducting all of its liabilities is classified as 4. Entity A issues an instrument that is re-purchasable by d. Liabilities arising from constructive obligations. Physical assets, such as inventories and PPE. and financial liability remain unaltered. Which of the following is within the scope of PAS 32? b. Contracts for the delivery or receipt of commodity and other non-financial items that can be settled net in cash or Financial assets in the form of investments in subsidiaries, 1. a. b. Co non-financial items that can be settled net in cash or Physical assets, such as inventories and PPE C. ssets after deducting all of its liabilities is classified as a. a financial…
Which of the following statements best describes the term "liability"? *a. An excess of equity over current assetsb. Resources to meet financial commitments as they fall duec. The residual interest in the assets of the entity after deducting all of its equityd. A present obligation of the entity arising from past events
1. Which of the following may be measured subsequently at amortized cost?a. None of theseb. A non-derivative equity instrumentc. A derivalived. A non-derivative debt instrument 2. An investment in equity instrument may not be classified as a financial asset subsequently measured ata. Fair value through other comprehensive incomeb. Amortized costc. Fair value through proft or lossd. None of these 3. Significant influence isa. The contractually agreed sharing of control of an arrangement, which exists only when decisions about the relevant activities require the unanimous consent of the parties sharing control.b. The power to govern the financial and operating policies of an entity so as to obtain benefits from its activities.c. The power to participate in the financial and operating policy decisions of the investee but is not control or joint control over those policies.d. Deemed to exist when the investor is exposed, or has rights, to variable returns from its involvement with the…
Which of the following loan commitments are within the scope of IPFRS 9? * Loan commitments that the entity designates as financial liabilities at fair value through profit or loss Loan commitments that can be settled net in cash or by delivering or issuing another financial instrument Commitments to provide a loan at a below-market interest rate
How shall an entity subsequently measure financial liabilities? Is IFRS measurement of financial liabilities similar to that of U.S. GAAP? Also briefly describe the requirements regarding an option to designate a financial liability at fair value through profit and loss. Q: Does U.S. GAAP allow fair value option for financial assets and liabilities? Q; What is “own credit” issue related to financial liabilities measured at fair value through profit and loss? Q: How does IFRS 9 address this “own credit” issue?
1. According to PAS 1, a currently maturing debt that the entity'smanagement intends to refinance is presented as noncurrent.2. According to PFRS 15, if an entity expects that a portion of giftcertificates sold will not be redeemed, the entity recognizes theexpected breakage amount as revenue in proportion to the pattern of rights exercised by customers.3. Unearned revenue is revenue that is earned but not yet collected Please answer these 3 question true or false
IFRS requires companies to measure their financial assets at fair value except when based on:(a) whether the equity method of accounting is used.(b) whether the fi nancial asset is a debt investment.(c) whether the fi nancial asset is an equity investment.(d) whether an investment is classifi ed as trading.
What is the principle for recognition of a financial asset in PFRS 9? A. A financial asset is recognized when, and only when, the entity obtains control of the instrument and has the ability to dispose of the financial asset independent of the actions of others. B.A financial asset is recognized when, and only when, the entity becomes a party to the contractual provisions of the instrument. C. A financial asset is recognized when, and only when, the entity obtains the risks and rewards of ownership of the financial asset and has the ability to dispose of the financial asset. D. A financial asset is recognized when, and only when, it is probable that future economic benefits will flow to the entity and the cost or value of the instrument can be measured reliably.
In accordance with AASB 9, the recognition of a financial asset or financial liability will be influenced by considerations as to whether there is a contractual right to exchange financial assets or financial liabilities with another entity under conditions that are potentially favourable, or potentially unfavourable, to the entity. Explain what this requirement means.
Under PFRS 9, a financial asset shall be measured subsequently at amortized cost when: I. The business model of the entity is to hold the financial asset in order to collect contractual cash flows on specifies dates. II. The contractual cash flows are solely payment of principal and interest on the principal amount outstanding. O Il only Both I anf II O Either I orll O lonly Next
30. The following statements are incorrect, except: a. Issued instruments are classified as liabilities or equity in accordance with the legal form of the contractual arrangement and the definitions of the financial liability and an equity instrument. b. A preference share that will be redeemed by the issuer for cash on a future date is a financial liability. c. IAS 37 prescribes the accounting and disclosure for all provisions, contingent liabilities and contingent assets, and those resulting from financial instruments that are carried at fair value. d. Issued instruments are classified as liabilities or equity in accordance with the management’s designation of the contractual arrangement.
Which of the following is the second option in measuring the equity instrument issued to extinguish a financial liability A.fair value of the equity instrument B.carrying amount of the equity instrument Cfair value of the financial liability D.carrying amount of the financial liability