Chapter 1 Instments- Additional Concepts 682 683 Disclosure of risks 12. Which of the following types of information does PFRS 7 not 9. ABC Co acquires bonds with face amount of Pl00,000 at tair value of PIO0,000. The effective interest rate is 10%, equal to the nominal interest rate. ABC Co. classifies the bonds as Impairment require to be disclosed about exposure to risks arising from financial instruments? Qualitative and quantitative information about market risk. b. Qualitative and quantitative information about credit risk. Qualitative and operational risk. d. Qualitative and quantitative information about liquidity a. subsequently measured at FVOCI. At the reporting date, the fair value of the bonds decreases to PL000. ABC Co. estimates 12-month expected credit losses of C. quantitative information about P3,000. Requirements: Prepare the year-end jourmal entries to recognize the impairment loss and to accrue the interest income for the year risk. (Adapted) a In accordance with PFRS 7 Financia! Instruments: Disclosures, which of the following best describes credit risk? The risk that one party to a financial instrument will cause a financial loss for the other party by failing to discharge obligation b. The risk that an entity will encounter difficulty in meeting obligations associated with financial liabilities c. The risk that the fair value associated with an instrument (assume 1-year interest). Dividends a. 10. Karter Company purchased 200 out of the 1,000 outstanding shares of Flynn Company's common stock (ordinary shares) for P180,000 on January 2, 2004. During 2004, Flynn Company declared dividends of P30,000 and reported earnings for the an year of P120,000. will vary due to changes in the counterparty's credit rating d. The risk that an entity's credit facilities will be withdrawn If Karter Company used the fair value method of accountine for its investment in Flynn Company, how much dividend income is recognized by Karter in 2004? (Adapted) due to cash flow sensitivities (ACCA) Stock rights 11. Karter Company holds 200 shares of Flynn Company's common stock. On September 30, 2004, Flynn Company issued stock rights on a "1-for-1" basis. The stock rights are exercisable until June 30, 2005. The stock rights have fair values per right of P5.00 and P5.50 on September 30, 2004 and December 31, 2004, respectively. How much is the carrying amount of the stock rights 'in Karter's December 31, 2004 statement of financial position? (Adapted) 10%, aripal on iber nuary 1, auA 20x1. The yie d ere its September 1, 20x2, Michael Hedoe uld ices be re