Debt investments not plan to sell reported at a. amortized cost. b. fair value. c. the lower of amortized cost of fair value. d. net realizable value.
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- impairments on financial instruments are ? A) recognized as a realized loss if the impairment is judged to be temporary B) based on discounted cash flows for securities C) based on fair value for available-for-sale investments and negotiated values for hel-to-maturity investments D) evaluated using the CECL model similiar to receivablesThe realized gain (loss) on sale of debt investments with an objective of collecting contractual cash flows and to sell when circumstances warrants is the difference of the net selling price and the fair value of the bonds. Group of answer choices False TrueWhich statement is not true? Equity investment and trading debt investment have the same accounting about how to report their unrealized gain/loss and how to report them on the balance sheet. Only debt securities, not equity securities, can be classified as held-to-maturity, available-for-sale or trading. Change in fair value of available-for-sale and held-to-maturity debt investments have no impact on net income. Cash flows relating to held-to-maturity investments and trading investments involve both investing and operating activities.
- Which of the following is false? A. Under PFRS 9, the basis of carrying investments in debt securities as FVPL, FVOCI, or at amortized cost, is the entity’s business model. B. Under PFRS 9, an investment in equity securities not held for trading is automatically accounted for as FVOCI. C. Reclassification of investment in equity securities under PFRS 9 is not allowed. D. Under PFRS 9, reclassification of investment in debt securities is allowed. Or none of the choices?an investment in equity instrument may not be classified as a financial asset subsequently measured at a) Fair value through profit or loss b) Amortized cost c) Fair value through other comprehensive income d) none of theseUnder 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.
- Which of the following statements is correct? a. IFRS permits the fair value option for the equity method of accounting. b. GAAP permits recovery of impairment losses. c. Under IFRS, non-trading equity investments are accounted for at amortized cost. d. IFRS and GAAP both have a trading investment classification.An unrealized holding gain or loss on a trading debt investment is the difference between the investments Select one: a. fair value and original cost. b. fair value and amortized cost. c. face value and amortized cost. d. face value and original cost.The use of fair value to account for debt investments allows for more relevance of accounting figures because they would reflect the latest market assessment and opinion regarding these instruments. a. Do you agree with this statement? Explain why. b. What are the possible disadvantages’ of using the fair value accounting?
- Which statement is true when a debt investment at amortized cost is reclassified to FVOCI? a. All these statements are true. b. The difference between the previous carrying amount and fair value at reclassification date is recognized in other comprehensive income. c. The original effective rate is not adjusted d. The debt investment is measured at fair value at reclassification date.1. According to PFRS 9, The amortized cost of a financial instrument is calculated using. A. The effective interest method. B. The straight line method C. A or b D. Choice a however, the straight line method can be used in some circumstances. 2. The amortization of a discount on an investment in bonds measured at amortized cost A. Increases the carrying amount of the investment B. Is the excess of interest income over interest received or receivable. C. Is recorded directly to the invesment account D. All of these 3. Which of the following statements is correct for an investment in term bonds that was acquired at a premium? A. The amortized cost of the bonds increases annually. B. The current and non current portions of the bonds as of the reporting date are reported separately. C. The interest income recognized each year is higher than the amount of interest received/ receivable. D. The effective interest rate is lower than the stated rate of the bonds. 4. The rate…When the market value of a company’s portfolio of available-for-sale securities is lower than its cost,the difference should be: a. accounted for as a valuation allowance deducted from the asset to which it relates b. accounted for as an addition in the shareholders’ equity section of the balance sheet c. accounted for as a liability d. disclosed and described in a note to the financial statements but not accounted for.