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Q: PFRS 9 requires entities to measure their financial assets
A: PFRS 9 requires entities to measure their financial assets based on The contractual cash flow…
Q: eposits held as compensating balances a. if legally restricted and held against long-term credit…
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Question 1
True or False:
Monetary Assets and liabilities constitute assets and liabilities whose amounts are fixed in terms of units of currency by contract or otherwise. Examples are inventories; investments in common stocks; property, plant, and equipment; and liabilities for rent collected in advance.
True
False
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- TRUE or FALSE The currency in which most of the inflows and outflows of the entity is denominated pertains to transaction currency. Monetary items are currencies held and are assets/liabilities to be received or paid in undeterminable amount of money. Mr. Ang holds a position as a director both in Kemerlu Co. and Eklavu Co. therefore Kemerlu and Eklavu are related parties. Any of the following should be met for borrowing cost to be capitalized, borrowing cost are being incurred; activities necessary to prepare the asset for its intended used or sale are being undertaken; expenditures for the asset are being incurred. The capitalization rate used to determine the capitalizable borrowing cost should be disclosed. When translating income and expenses exchange rates at the dates of transactions will be used, however average rate can be accepted even rates fluctuate significantly. The borrowing cost to be capitalized in general borrowing cost is the lower between the amount computed…1. Which of the following statements are correct? (1) Materiality means that only items having a physical existence may be recognised as assets. (2) The substance over form convention means that the legal form of a transaction must always be shown in financial statements even if this differs from the commercial effect. (3) The money measurement concept is that only items capable of being measured in monetary terms can be recognized in financial statements. A 2 only B 1, 2 and 3 C 1 only D 3 onlyExplain Why17.These are conditions required by IFRS 9 for notes and accounts receivable to be measured at amortized cost.I. The financial asset is held within the enterprise's business model whose objective is for trading purposes.II. The financial asset is held within the enterprise's business model whose objective is to hold assets in order to collect contractual cash flows.III. The contractual terms of the financial asset give rise on specified dates to cash flows that are solely payments of principal and interest. a. I and II only b. II and III only c. I and III only d. I, II and III
- Question 14 Which statement is incorrect regarding contractual cash flows that are solely payments of principal and interest (SPPI)? Group of answer choices 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. Contractual cash flows that are SPPI on the principal amount outstanding are consistent with a basic lending arrangement. Principal is the fair value of the financial asset at initial recognition. An originated or a purchased financial asset can be a basic lending arrangement only if it is a loan in its legal form.TRUE OR FALSE 1.Investments are assets held by an entity for the accretion of wealth through distribution, for capital appreciation or for other benefits to the investing entity. 2.Accounts Receivable, Notes Receivable, and Loans Receivable are financial assets because these represents a contractual right to receive cash in the future 3.Financial assets at fair value through profit or loss include both equity securities and debt securities.6.On a statement of financial affairs, a company's liabilities should be valued at Select one: a.the present value of future cash flows. b.the amount expected to be paid if the company could honor its debts. c.net realizable value. d.the amount required for settlement. e.replacement cost.
- 1. Cash is a monetary and financial asset. It is the most liquid finance asset; it is also thestandard medium of exchange for most business transactions. Cash is usuallyclassified as a current account, however there are circumstances in which cash isclassified as a non-current asset. Required:With the aid of a suitable example, explain when can be classified as a non-currentasset.Q4 Which of the following statements is NOT correct? (i) For an asset to be classified as a financial asset, cash or a right to receive cash or another financial asset should exist (ii) Cash constitutes a financial asset on its own. (iii) Any asset that can be interchanged for cash or cash equivalent should be classified as a financial asset even if there is no contractual right to receive cash or another financial asset. (iv) There is need for there to be a written and signed contract between buyer of the financial asset and the seller. Select one or more: a. (iii) and (iv) only b. (i), (ii), (iii) and (iv) c. (ii) only d. (i), (ii) and (iii) only2. Which of the following is an appropriate aggregation? A. Cash and cash equivalents (Cash in bank and sinking fund) B. Trade and other receivables (Accounts receivable and investment in bonds) C. Trade and other payables (Accounts payable and accruals) D. Provisions (Income tax payable and warranty liability)
- TRUE OR FALSE 1.Investments are assets held by an entity for the accretion of wealth through distribution, for capital appreciation or for other benefits to the investing entity. 2.Accounts Receivable, Notes Receivable, and Loans Receivable are financial assets because these represents a contractual right to receive cash in the future 3.Financial assets at fair value through profit or loss include both equity securities and debt securities.4.Financial assets at amortized costs include only debt securities. 5.Equity security represents an ownership interest in an entity. 6.Equity security represents an ownership interest in an entity. 7.If the financial asset is held for trading or if the financial asset is measured at fair value through profit or loss, transaction costs are expensed outright. 8.Significant influence is the power to participate in the financial and operating policy decisions of the investee entity but not control or joint control over those policies. 9.Amortization of…2. To be reported as “cash and cash equivalent”, the cash and cash equivalent must be a. Unrestricted in use for current operations b. Available for the purchase of property, plant and equipment c. Set aside for the liquidation of long-term debt d. Deposited in the bankDeposits held as compensating balances a. if legally restricted and held against long-term credit may be included among current assets b. if legally restricted and held against short term credit may be included as cash c. if not legally restricted and held against short-term credit should be included in the cash balance. d. if not legally restricted and held against short-term credit should be reported separately from cash but is included among the current assets.