Depending on the business model for managing financial assets, an entity shall

classify financial assets subsequent to initial recognition at *

=All of these are used in measuring financial assets

Debt investments not held for collection are reported at *

=Fair value

Unrealized gains and losses on trading investments are reported *

=Net income

Entities are required to measure financial asset based on all of the following,
EXCEPT *
=Whether the financial asset is a debt or an equity

If the financial asset is measured at fair value through profit or loss, transaction costs
directly attributable to the acquisition shall be *
=Expensed immediately when incurred

Under PFRS, the presumption is that equity investments are *

=Held for trading and held to profit from price changes

Gain or loss on disposal of equity investment measured at fair value through

comprehensive income is recognized in *
=Retained earnings

Which of the following is NOT a category of financial assets? *

=Financial assets held for sale
The irrevocable election to present changes in fair value in other comprehensive
income is applicable only *
=Equity instrument that is NOT held for trading

What is the measurement if the business model is achieved both by collecting

contractual cash flows and by selling the financial asset? *
=Fair value through other comprehensive income

Debt investments that are reported at amortized *

=Held for collection debt investments
All of the options are correct
Managed and evaluated based on a documented risk-management strategy
Trading debt investments

All of the following financial assets shall be measured at fair value through profit or
loss, EXCEPT *
=Financial assets at amortized cost

A debt investment shall be measured subsequently at amortized cost *

=When the business model is to collect contractual cash flows that are solely payments of
principal and interest

Debt investments that meet the business model and contractual cash flow tests are
reported at *
=Amortized cost

Transaction costs INCLUDE *

Finance costs
=Fees and commission paid to agent, levies by regulatory authorities, transfer taxes and duties
Internal administrative costs
Debt premiums or discounts

The interest income for the year would be lower if the bond was purchased at *
=A premium
Transaction costs directly related to the acquisition of trading bond investments are  *
Part of the initial carrying amount
Expensed immediately
Accounted for separately as deferred charge
A component of other comprehensive income

Bond usually sell at a premium *

When the price of the bonds is greater than maturity value
When market rate is greater than stated rate
When stated rate is greater than market rate
In none of the options

The effective interest rate on bond is lower than the stated rate when bond sells  *
Above face amount
Below face amount
At maturity value
At face amount

The interest rate written on the face of bond is *

=Nominal rate, coupon rate or stated rate

Which statement is CORRECT about the (effective) interest method? *

The interest method applied to bond is different from that applied to other debt investment.
Amortization of premium decreases from period to period.
The interest method applies the effective interest rate to the beginning carrying amount.
Amortization of discount decreases from period to period.

The interest method of amortizing discount provides for *

=Decreasing amortization and increasing interest income

The fair value option allows an entity to *

=Report most financial instruments at fair value.

A gain or loss on sale of trading bond investment is the difference between *

Sale price and fair value
Fair value and carrying amount
Face amount and carrying amount
Sale price and carrying amount
The contractual agreement between an investor and the bond issuer is contained in a
formal document known as *
=Bond indenture

When the interest payment dates of a bond are May 1 and November 1, and a bond is
purchased on June 1, the amount of cash paid by the investor would be *
=Increased by accrued interest from May 1 to June 1

The effective interest rate on bond is higher than the stated rate when bond sells *
Below face amount
Above face amount
At maturity value
At face amount

To compute the price to pay for a bond, what present value concept is used *
=The present value of 1 and the present value of an annuity of 1

Trading bond investments are *

Not held for collection
Either held for collection or not held for collection depending on management strategy
Noncurrent investments
Held for collection

A bond investment that satisfies the amortized cost measurement may be designed *
Revocably at fair value through profit or loss
Irrevocably at fair value through OCI
Irrevocably at fair value through profit or loss
Irrevocably at either fair value through OCI of fair value through profit or loss.

When an investor purchased a bond between interest rates at a premium, the cash
paid to the seller is *
=The same as the dace amount of the bond plus accrued interest

The interest method of amortizing premium provides for *

=Increasing amortization and decreasing interest income
The fair value option *
Must be applied to all debt instruments.
May be selected as a valuation method at any time.
All of the options are correct
Reports all gains and losses in income

Which of the following statements is CORRECT in regard to trading bond

investments? *
=All the options are correct. -correct answer
Any discount or premium is not amortized.
Trading bond investments are held with intention of sellinh them in a short period of time.
Unrealized gains and losses are reported as part of net income

The interest income for the year would be higher is the bond was purchased at *
=A discount

The actual interest earned by the bondholder is *

=Effective rate, yield rate or market rate

Amortized cost is the initial recognition amount *

Plus discount amortization or minus premium amortization
=All of the options are correct about amortized cost-correct answer
Minus reduction or impairment
Minus repayments

Accrued interest on bonds purchased between interest dates *

=Increases the amount a buyer must pay

Bonds usually sell at a discount when investors are willing to invest in bonds *
=At rate higher than the stated interest rate

Trading bond investments are reported at *

Maturity value
Face value
Fair value
Amortized cost

when an entity accounts for an investment in ordinary shares under the equity method, cash dividend
received is recorded as

= a reduction of the carrying amount of the investment.

an investor has a long-term investment in stocks. regular cash dividends received by the investor are
recorded as

=c. income a reduction of the investment

Judd, Inc., owns 35% of Cosby Corporation. During the calendar year 2021, Cosby had net earnings of
$300,000 and paid dividends of $30,000. Judd mistakenly recorded these transactions using the fair
value method rather than the equity method of accounting. What effect would this have on the
investment account, net income, and retained earnings, respectively?

=understate, understate, understate

The existence of significant influence by an investor is usually evidenced in one or more of the following
ways, Except

a) representation on the board of directors or equivalent governing body of the investee;

b) participation in policy-making processes, including participation in decisions about dividends or other

distributions;

c) material transactions between the investor and the investee;

d) interchange of managerial personnel; or e) provision of essential technical information.

=control

goodwill arising from an investment in associate is

=Included in the carrying amount of the investment and not amortized

under what circumstances can the profit or loss on an equity instrument carried at fair value be dealt
with in other comprehensive income
=