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    The document discusses the classification and measurement of financial assets under various categories. It addresses questions related to classifying financial assets held for trading, at fair value, at amortized cost, and for reclassifications between categories.

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    The document discusses the classification and measurement of financial assets under various categories. It addresses questions related to classifying financial assets held for trading, at fair value, at amortized cost, and for reclassifications between categories.

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    The document discusses the classification and measurement of financial assets under various categories. It addresses questions related to classifying financial assets held for trading, at fair value, at amortized cost, and for reclassifications between categories.

    Copyright:

    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
    Download as docx, pdf, or txt
    4 views3 pages

    Ez

    Uploaded by

    yes yesno
    The document discusses the classification and measurement of financial assets under various categories. It addresses questions related to classifying financial assets held for trading, at fair value, at amortized cost, and for reclassifications between categories.

    Copyright:

    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
    Download as docx, pdf, or txt
    of 3

    FINANCIAL ASSET AT FAIR VALUE ( MARTIN AND SALIPADA)

    THEORIES
    1. A financial asset is classified as held for trading if
    a. It is acquired principally for the purpose of selling or repurchasing it in the near term
    b. On initial recognition, it is part of a portfolio of identified financial assets that are
    managed together and for which there is evidence of a recent actual pattern of short-
    term profit taking.
    c. It is a derivative, except for a derivative that is a financial guarantee or a designated
    and an effective hedging instrument.
    d. All of these are classified as held for trading

    Answer: d

    2. What is the best evidence of the fair value of a financial asset?


    a. The cost, including transaction cost
    b. The estimated value determines using discounted cash flow technique or option
    pricing model
    c. The quoted price, if an active market exists for the financial asset
    d. The present value of the contractual cash flow

    Answer: c

    3. An entity purchased equity shares of another entity not for the purpose of selling and
    repurchasing but to be held as long-term investment. The most appropriate classification
    of this equity investment is
    a. Financial asset at fair value through profit or loss
    b. Financial asset held for trading
    c. Financial asset at fair value through other comprehensive income
    d. Amortized cost

    Answer: a

    4. The business model in managing financial assets is to collect contractual cash flows that
    are solely payments of principal an interest. Which of the following is the most
    appropriate classification for the financial assets?
    a. Held for trading
    b. At fair value through profit or loss
    c. At amortized cost
    d. At fair value through other comprehensive income

    Answer: c
    5. Which statement is true when a debt investment at amortized cost is reclassified to
    FVOCI?
    a. The debt investment is measured at fair value at reclassification date.
    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. All of these statements are true.

    Answer: d

    6. Which statement is true when a debt investment at FVOCI is reclassified to amortized


    cost?
    a. The fair value at reclassification date becomes the new carrying amount.
    b. The cumulative gain or loss previously recognized in OCI is removed from equity
    and adjusted against the fair value at reclassification date.
    c. The original effective rate is not adjusted.
    d. All of these statements are true.

    Answer: d

    7. When a financial asset at FVPL is reclassified to FVOCI, the new carrying amount is
    equal to
    a. Fair value at reclassification date
    b. Original carrying amount
    c. Present value of contractual cash flows
    d. Present value of expected cash flows

    Answer: a

    8. Which statement is true when a financial asset at FVOCI is reclassified to FVPL?


    a. The financial asset continues to be measured at fair value.
    b. The fair value at reclassification date becomes the new carrying amount.
    c. The cumulative gain or loss previously recognized in OCI is reclassified to profit or
    loss
    d. All of these statements are true.

    Answer: d

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