Which statement is incorrect regarding contractual cash flows that are solely payments of principal and interest (SPPI)? a. principal is the fair value of the financial asset at initial recognition b. contractual cash flows that are SPPI on the principal amount outstanding are consistent with a basic lending engagement c. an originated or a purchased financial asset can be a basic lending arrangement only if it is a loan in its legal form d. 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

Which statement is incorrect regarding contractual cash flows that are solely payments of principal and interest (SPPI)? a. principal is the fair value of the financial asset at initial recognition b. contractual cash flows that are SPPI on the principal amount outstanding are consistent with a basic lending engagement c. an originated or a purchased financial asset can be a basic lending arrangement only if it is a loan in its legal form d. 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

Financial Accounting Intro Concepts Meth/Uses

14th Edition

ISBN:9781285595047

Author:Weil

Publisher:Weil

Chapter12: Liabilities: Off-balance-sheet Financing, Retirement Benefits, And Income Taxes

Section: Chapter Questions

Problem 2Q

See similar textbooks

Similar questions

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 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.
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
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.
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
Which of the following is correct regarding the classification of investment in debt instruments as financial asset at fair value through OCI? a. This classification is not allowed for investment in debt instruments. b. An entity may make an irrevocable election to classify investment in a debt instrument that is not ‘held for trading’ as such. c. 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. d. All of the above.
Which of the following is correct regarding the classification of investment in debt instruments as financial asset at fair value through OCI? This classification is not allowed for investment in debt instruments. 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. An entity may make an irrevocable election to classify investment in a debt instrument that is not held for trading as such. All of these.
Which of the following is correct regarding the classification of investment in debt instruments as financial asset at fair value through OCI? A. All of these. B. An entity may make an irrevocable election to classify investment in a debt instrument that is not held for trading' as such. C. 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 i assets are integral to meeting management's objectives. D. This classification is not allowed for investment in debt instruments.
Which statement is incorrect regarding classification of financial assets? a. An entity can classify financial assets that meet the amortized cost criteria as at FVPL if doing so eliminates or reduces an accounting mismatch. B. In order to be classified at fair value through OCI, a debt instrument needs to have either simple principal and interest cash flows or be held in a business model in which both holding and selling financial assets are integral to meeting management’s objectives. C. An investment in equity instrument may not be classified as financial asset subsequently measured at amortized cost. D. Reclassifications of financial assets are only permitted on the change of an entity’s business model and are expected to occur only infrequently.
Which of the following returns is consistent with contractual cash flows that are solely payments of principal and interest or SPPI? I. Return of passage of time II. Return for the risk that one party to a financial instrument will cause a financial loss for the other party by failing to discharge an obligation III. Return for the risk that an entity will encounter difficulty in meeting obligations associated with financial liabilities that are settled by delivering cash or another financial asset IV. Return for amounts to cover expenses and a profit margin a. I, II, III, and IV b. I, II, and III c. I and IV only d. II and III only
investments in debt instruments are financial asset because they are: -equity instruments of another entity -cash equivalent - all of these -Contractual rights to receive cash ot another financial asset from another entity
5.According to PFRS9 Financial Instruments, a financial instrument is recognized when the entity purchases investments in equity securities when the entity becomes a party to the contractual provisions of the instrument when the entity has a codified business model with an objective of holding assets in order to collect contractual cash flows all of these