Examples of when an entity has retained substantially all the risks and rewards of ownership of transferred financial asset include A. All of these. B.A sale and repurchase transaction where the repurchase price is a fixed price or the sale price plus a lender's return. C.A sale of a financial asset together with a total return swap that transfers the market risk exposure back to the entity. D.A sale of short-term receivables in which the entity guarantees to compensate the transferee for credit losses that are likely to occur.

Examples of when an entity has retained substantially all the risks and rewards of ownership of transferred financial asset include A. All of these. B.A sale and repurchase transaction where the repurchase price is a fixed price or the sale price plus a lender's return. C.A sale of a financial asset together with a total return swap that transfers the market risk exposure back to the entity. D.A sale of short-term receivables in which the entity guarantees to compensate the transferee for credit losses that are likely to occur.

Intermediate Accounting: Reporting And Analysis

3rd Edition

ISBN:9781337788281

Author:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Publisher:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Chapter10: Property, Plant And Equipment: Acquisition And Subsequent Investments

Section: Chapter Questions

Problem 1C

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Similar questions

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 mismatch
The best evidence of fair value for an investment property is price in a binding sale agreement fair value determined on the basis of observable data current price in an active market. management’s estimate of future cash flows multiplied by a discount rate
Assuming the investment is appropriately recognized as a financial asset intended to collect contractual cash flows and also to sell the bonds in open market: Determine the initial valuation of the investment.
Which statement is incorrect regarding contractual cash flows that are solely payments of principal and interest (SPPI)? a.Contractual cash flows that are SPPI on the principal amount outstanding are consistent with a basic lending arrangement. b.Principal is the fair value of the financial asset at initial recognition. c.An entity shall assesswhether contractual cash flows are SPPI on the principal amount outstanding for the currency in which the financial asset is denominated. d.An originated or a purchased financial asset can be a basic lending arrangement only if it is a loan in its legal form.
Which 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 incorrect
When nonmonetary assets are exchanged, a company records the cost of the nonmonetary asset acquired at: a.The fair value of the nonmonetary asset surrendered minus cash paid. b.The book value of the asset received minus cash paid. c.The fair value of the nonmonetary asset surrendered plus cash paid. d.The fair value of the nonmonetary asset surrendered plus cash received.
Which of the following statements is TRUE? a. The acquirer shall measure the identifiable assets acquired and the liabilities assumed at their acquisition-date fair value. b. Transaction costs directly related to the issue of debt instruments are deducted from the fair value of the debt on initial recognition and are amortized over the life of the debt as part of the effective interest rate. Directly attributable transaction costs incurred issuing equity instruments are deducted from revenue. c. In net asset acquisition, gain on bargain purchase is recognized in the Profit or Loss of the acquirer (after reassessment) if the consideration transferred is more than the fair value of net assets acquired. d. According to IFRS #3: Revised, cost directly attributable in effecting the business combination (e.g., finders’ fee and other direct cost) must be charged to share premium.
Which of the following is correct regarding the classification of investment in debt instruments as financial asset at fair value through OCI? Group of answer choices All of these. An entity may make an irrevocable election to classify investment in a debt instrument that is not ‘held for trading’ as such. 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. This classification is not allowed for investment in debt instruments.
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 receivables
Which statement is incorrect regarding contractual cash flows that are solely payments of principal and interest (SPPI)? Group of answer choices Contractual cash flows that are SPPI on the principal amount outstanding are consistent with a basic lending arrangement. An originated or a purchased financial asset can be a basic lending arrangement only if it is a loan in its legal form. Principal is the fair value of the financial asset at initial recognition. An entity shall assess whether contractual cash flows are SPPI on the principal amount outstanding for the currency in which the financial asset is denominated.
The 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 True
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