omens EM 1: MULTIPLE CHoIcy ring the period, an entity has a “hold to collect qn tites ct aNd sep jon nves a” tment. The entitY Srestment should be classitieg ag isiness investment’ measured at model, The 6 pu entity fair comprehensive income, Value through p._ investment Measured at amor other C investment measured at f ized cost, . ir Value thre a any at eae Ugh Profit or oss 4 fanentiy’s business model's ob jn order to collect contractual payments for principal and inter je classified as investment measured at fair value th comprehensive income. oe investment measured at amortized cost investment measured at fair value through profit or | loss. d. any of these be i ete is to hold investments 7 flows that are solely » then investments should 3, A permanent decline in the fair value of an investment in equity securities that the entity made an irrevocable election at initial recognition to subsequently measure at FVOCI is recognized in a. profit or loss. b, other comprehensive income. c.either a orb not recognized 4. Boss Co. purchased bonds at a discount in the open market as an investment, The bonds will be held in order to collect their contractual cash flows. Boss should account for these bonds at a. Cost. c. Fair value through OCI. b. Amortized cost. d, Lower of cost or market. 3 According to PERS 9, on initi the entity has the al recognition, dave option of designating financial purer | assets to be measgy a if doing so enhances the qualitative characteris. financial information presented in the financial state, b. if doing so significantly reduces or eliminates “accg mismatch’ ¢. if itis required by “shadow accounting.” dat the entity’s management's absolute discretion, Men Ounting PROBLEM 2: FOR CLASSROOM DISCUSSION Classification 1. An entity invests in a pool of assets that is managed by investment house. In accordance with the entity's busi model, the investment will be held until it matures in 10 yea time, at which date the entity will collect the principal am, in the investment together with the interest eamed, accordance with the principles of PFRS 9, the entity will rm, likely measure the investment at a. Amortized cost. ¢. FVOCI (Mandatory), b. FVPL. 4. FVOCI (Election), 2. An entity plans to purchase a new machine in a few yea time. The cost of the new machine is significant. To addr this, the entity invests in debt securities. The entity’ investment management strategy is to hold the investme and collect the investment income in the form of inter However, when opportunity arises, the entity sells investment in order to realize fair value gain. The entit reinvests any proceeds from sales until the date of purchase the new machine. In accordance with the principles of PFRS. the entity will most likely classify the investment subsequently measured at a. Amortized cost. c. FVOCI (Mandatory). b. FVPL. d. FVOCI (Election). Measurement 3. Which of the following financial assets are measured at f value through profit or loss? a. held for trading securities c. trade receivabl b. designated financial assets d,aandb