Questionnaire Intact
Questionnaire Intact
The same as the face amount of the bond plus accrued interest.
The same as the face amount of the bond.
More than the face amount of the bond.
Less than the face amount of the bond.
Which one of the following statements with regard to marketable securities is incorrect?
The held-to-maturity portfolio consists only of debt securities.
In the portfolio of marketable equity securities, unrealized gains and losses are recorded on the income
statement.
In the available-for-sale portfolio of marketable debt securities, unrealized gains and losses are recorded
on the income statement.
Debt securities may be transferred from the held-to-maturity to the available-for-sale portfolio.
Fair value, with unrealized gains and losses reported in net income.
Amortized cost, with no unrealized gains or losses reported.
Replacement cost, with no unrealized gains or losses reported.
Fair value, with unrealized gains and losses reported in other comprehensive income (OCI).
The amount by which the fair value of a debt security exceeds its cost should be accounted for in the
financial statements when the security is classified as
Trading
Available-for-Sale
A. Yes
No
B. No
Yes
C. No
No
D. Yes
Yes
An investor purchased a bond classified as a long-term investment between interest dates at a discount. At
the purchase date, the carrying amount of the bond is more than the
Cash Paid to Seller
Face Amount of Bond
A. Yes
No
B. Yes
Yes
C. No
No
D. No
Yes
An investor purchased a bond as a long-term investment on January 2. The investor's carrying amount at
the end of the first year will be highest if the bond is purchased at a ____________
Kale Co. purchased bonds at a discount on the open market as an investment and has the intent and ability
to hold these bonds to maturity. Absent an election of the fair value option, Kale should account for these
bonds at
Cost.
Fair value.
Lower of cost or market.
Amortized cost.
Unrealized gains and losses on trading debt securities should be presented in the
Trading securities.
Available-for-sale securities.
Discontinued operations.
Held-to-maturity securities.
1. Under the cost model of accounting for an investment, changes to the carrying amount of the
investment occur if:
A. the investee earns post-acquisition profits or losses;
B. goodwill included in the investment is amortised;
C. the investment is impaired;
D. dividends are received from the investee.
The method of accounting that applies to an investor and associate relationship is the:
A. cost method;
B. fair value method;
C. consolidation method;
D. equity method.
4.
For the purposes of equity accounting, significant influence is regarded as the power of an investor to:
The equity method of accounting need not be applied where the investment:
A. represents more than 20% of the voting shares of an associate;
B. does not provide the investor with significant influence;
C. is held exclusively with a view to its disposal within 12 months;
D. is made by an investor who has no subsidiaries.
Where all of the following conditions apply an investor need not apply the equity method of accounting:
I. The investor is a wholly owned subsidiary or a partly owned subsidiary and its owners do not object
to the method not being used.
II. The investor's debt or equity securities are not traded in a public market.
III. The investor has not filed financial statements with a regulatory organisation for the purpose of
issuing any class of securities in a public market.
IV. The ultimate parent of the investor publishes consolidated financial statements that comply with
IFRS.
D. I, II, III and IV.
In respect to the equity method of accounting, where an investor has no subsidiaries the investor must
apply the:
A. cost method of accounting for investments in associates;
B. consolidated financial reporting
C. equity method in its own accounting records;
D. net present value method to measuring the expected cash flows from an associate.
The 'one-line' equity accounting method is used when accounting for an investment in:
D. an associate.
1. Which of the following is not a category of financial assets under PAS 39?
a. Financial assets at fair value through profit or loss
b. Available for sale financial asset
c. Held for sale investments
d. Loans and receivable
5. An entity acquired equity shares representing 5% of the issued ordinary shares. The investee’s
shares are listed on a stock exchange. Which of the following categories could this investment in
equity shares be classified?
a. Held to maturity
b. Available for sale
c. At fair value through profit or loss
d. Either as available for sale or at fair value through profit or loss
2. An entity may make an irrevocable election to present in other comprehensive income changes in
fair value of
a. An investment in equity instrument that is held for trading
b. An investment in equity instrument that is not held for trading
c. A financial asset measured at amortized cost
d. A financial asset measured at fair value through profit or loss
4. Debt investments that meet the business model and contractual cash flow tests and therefore held
for collection are reported at
a. Net realizable value c. Amortized cost
b. Fair value d. The lower of amortized cost of fair value
10. Equity investments acquired by an entity which are accounted for by recognizing unrealized
holding gains or losses as component of other comprehensive income are
a. Nontrading where an entity has holdings of less than 20%
b. Trading investments where an entity has holdings of less than 20%
c. Investments where an entity has holdings of between 20% and 50%
d. Investments where an entity has holdings of more than 50%
11. An impairment loss is the difference between the carrying amount of investment plus accrued
interest and the
a. Expected cash flows
b. Present value of the expected cash flows using historical effective interest rate
c. Contractual cash flows
d. Present value of the contractual cash flows using historical effective interest rate
12. Entities account for transfers of investments between categories
a. Prospectively, at the end of the period after the change in the business model
b. Prospectively, at the beginning of the period after the change in the business model
c. Retroactively, at the end of the current period after the change in the business model
d. Retroactively, at the beginning of the period after the change in the business model
4. Which of the following statement is true for measuring an asset at fair value?
a. The price of the asset should be adjusted for transaction cost
b. The fair value of the asset should be adjusted for cost to sell
c. The fair value is based upon an entry price to purchase the asset
d. The price should be adjusted for transportation cost to transport the asset to its principal
market
5. Which level has the highest priority for fair value measurement?
a. Level 1
b. Level 2
c. Level 3
d. Level 4
6. It is defined as a market in which transactions for the asset or liability take place with sufficient
frequency and volume to provide pricing information on an ongoing basis.
a. Active market c. Global market
b. Principal market d. Stock market
8. Which of the following is not a valuation technique used in fair value measurement?
a. Income approach c. Cost approach
b. Market approach d. Residual value approach
9. Valuation techniques for fair value that included the Black-Scholes model, binomial model or
discounted cash flow are known as
a. Income approach c. Cost approach
b. Market approach d. Exit value approach
The equity method is not required when the associate has been acquired and held with a view
to disposal within what time period?
A. Six months from the end of reporting period
B. Twelve months from the end of reporting period
C. Twelve months from date of classification as held for sale
D. In the near future
A financial liability
A. Must be classified as noncurrent liability.
B. Is a contractual obligation to deliver cash or another financial asset to another entity.
C. a contractual obligation to exchange financial assts or financial liabilities with anothe…
D. Is a contractual obligation to deliver cash or any asset to a…