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.
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A: Option (b) is correct. Explanation is given in next step.
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A:
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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.
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- 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 financial asset is a debt investment. c. whether the financial asset is an equity investment. d. whether an investment is classified as trading.Marketable securities are accounted for at their current fair value using mark-to-market accounting. Discuss why mark-to-market accounting is superior to accounting for mar- ketable securities at their historical cost. Should mark-to-market accounting be adopted to account for all assets on the balance sheet? Why or why not?Fair value is used to value which of the following balance sheet accounts? a. Prepaid expenses; patents; property, plant, and equipment b. Capital lease obligations, bonds payable c. Receivables net of allowance for doubtful accounts d. Debtsecurities available for sale, trading securities
- Statement 1: If the financial asset is measured at fair value through profit or loss, transaction costs directly attributable to the acquisition are expensed immediately when incurred. Statement 2: Trading bond investments are reported at fair value. A. Only statement 1 is true B. Only statement 2 is true C. Both statements are true D. Both statements are falseWhich of the following is correct regarding the classification of investment in debt instruments as financial asset at fair value through OCI? a. This classification is not allowed for investment in debt instruments. b. An entity may make an irrevocable election to classify investment in a debt instrument that is not ‘held for trading’ as such. c. In order to be classified as such, a debt instrument needs to both have simple principal and interest cash flows and be held in a business model in which both holding and selling financial assets are integral to meeting management’s objectives. d. All of the above.Under IFRS, a company: a. should evaluate only equity investments for impairment. b. accounts for an impairment as an unrealized loss, and includes it as a part of other comprehensive income and as a component of other accumulated comprehensive income until realized. c. calculates the impairment loss on debt investments as the difference between the carrying amount plus accrued interest and the expected future cash flows discounted at the investment's historical effective-interest rate. d. All of the above.
- 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?All of the following are true of the effect of fair value accounting on the financial statements except: a. any difference between the original cost or the prior period’s fair value must be recorded b. changes in the fair value of trading securities are recognized on the income statement c. valuation allowance accounts are reported on the balance sheet d. changes in the fair value of available-for-sale securities are recognized on the income statementWhich of the following is not a category of financial assets under GAM? Group of answer choices A.Held to maturity investments B.Available for sale financial assets C.Financial asset at fair value through other comprehensive income D.Loans and receivable
- Under what cisrcumstances under PFRS 9 can an entity classify financial assets that meet the amortized cost criteria as at FVTPL? A. where the business model approach is adopted B. where the financial asset passes the contractual cash flow characteristics test C. where the instrument is held to maturity D. if doing so eliminates or reduces an accounting mismatchWhich of the following is correct about subsequent measurement of financial asset at fair value? a. the financial asset shall be measured at fair value if the business model is not to collect contractual cash flows on specified dates and the contractual cash flow ae not solely payment of principal and interest. b. An entity may designate a finacncial asset as measured at fair value through profit or loss even if the financial asset satisfies the amortized cost measurement. c. both are correct d. both are incorrect1. Investments in debt securities are classified for accounting purposes as: A. Financial asset at amortized cost (AC), fair value through other comprehensive income (FVOCI) or fair value through profit or loss (FVPL) B. Financial asset at amortized cost (AC) or fair value through other comprehensive income (FVOCI) only C. Trading, Available-for-Sale (AFS) or Held-to-Maturity (HTM) D. Available-for-Sale (AFS) or Held-to-Maturity (HTM) only