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? 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.

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 3Q

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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 A. An entity may make an irrevocable election to classify investment in a debt instrument that is not ‘held for trading’ as such. B. All of these. C. This classification is not allowed for investment in debt instruments. D. 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.
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.
IFRS requires companies to measure their financial assets at fair value except when based on: a. whether the equity method of accounting is used. b. whether the financial asset is a debt investment. c. whether the financial asset is an equity investment. d. whether an investment is classified as trading.
17. 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 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. This classification is not allowed for investment in debt instruments.
The difference between debt and equity in an entity’s statement of financial position is not easily distinguishable for preparers of financial statements. Some financial instruments may have both features, which can lead to inconsistency of reporting. The international Accounting Standards Board has agreed that greater clarity may be required in its definitions of assets and liabilities for debt instruments. It is thought that defining the nature of liabilities would help the IASB’s thinking on the difference between financial instruments classified as equity and liability. Witco Limited patented and successfully tested a new e-cigarette. To expand its ability to produce and market this new product, Witco needs to raise $400,000. On January 1 2010, Witco issued a 12% $400,000, 5 year bond. The bond pays interest semi-annually on June 30 and December 31. The bonds effective interest rate is 10%. Calculate the proceeds from the sale of the bond & the discount or premium. Give 2…
The difference between debt and equity in an entity’s statement of financial position is not easily distinguishable for preparers of financial statements. Some financial instruments may have both features, which can lead to inconsistency of reporting. The international Accounting Standards Board has agreed that greater clarity may be required in its definitions of assets and liabilities for debt instruments. It is thought that defining the nature of liabilities would help the IASB’s thinking on the difference between financial instruments classified as equity and liability.a) Explain why it is important for entities to understand the impact of the classification of a financial instrument as debt or equity in the financial statements b) Witco Limited patented and successfully tested a new e-cigarette. To expand its ability to produce and market this new product, Witco needs to raise $400,000.On January 1 2010, Witco issued a 12% $400,000, 5 year bond. The bond pays interest…
The difference between debt and equity in an entity's statement of financial position is not easily distinguishable for preparers of financial statements. Some financial instruments may have both features, which can lead to inconsistency of reporting. The international Accounting Standards Board has agreed that greater clarity may be required in its definitions of assets and liabilities for debt instruments. It is thought that defining the nature of liabilities would help the IASB's thinking on the difference between financial instruments classified as equity and liability. a) Explain why it is important for entities to understand the impact of the classification of a financial instrument as debt or equity in the financial statements b) Witco Limited patented and successfully tested a new e-cigarette. To expand its ability to produce and market this new product, Witco needs to raise $400,000. On January 1, 2010, Witco issued a 12% $400,000, 5-year bond. The bond pays interest…
The difference between debt and equity in an entity's statement of financial position is not easily distinguishable for preparers of financial statements. Some financial instruments may have both features, which can lead to inconsistency of reporting. The international Accounting Standards Board has agreed that greater clarity may be required in its definitions of assets and liabilities for debt instruments. It is thought that defining the nature of liabilities would help the IASB's thinking on the difference between financial instruments classified as equity and liability. a) Witco Limited patented and successfully tested a new e-cigarette. To expand its ability to produce and market this new product, Witco needs to raise $400,000. On January 1, 2010, Witco issued a 12% $400,000, 5-year bond. The bond pays interest semi-annually on June 30 and December 31. The bonds effective interest rate is 10%:- i) Calculate the proceeds from the sale of the bond & the discount or premium. Give…
The difference between debt and equity in an entity’s statement of financial position is not easily distinguishable for preparers of financial statements. Some financial instruments may have both features, which can lead to inconsistency of reporting. The international Accounting Standards Board has agreed that greater clarity may be required in its definitions of assets and liabilities for debt instruments. It is thought that defining the nature of liabilities would help the IASB’s thinking on the difference between financial instruments classified as equity and liability. a) Explain why it is important for entities to understand the impact of the classification of a financial instrument as debt or equity in the financial statements Witco Limited patented and successfully tested a new e-cigarette. To expand its ability to produce and market this new product, Witco needs to raise $400,000.On January 1 2010, Witco issued a 12% $400,000, 5 year bond. The bond pays interest semi-annually…
IFRS requires companies to measure their financial assets at fair value except when based on:(a) whether the equity method of accounting is used.(b) whether the fi nancial asset is a debt investment.(c) whether the fi nancial asset is an equity investment.(d) whether an investment is classifi ed as trading.
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
The use of fair value to account for debt investments allows for more relevance of accounting figures because they would reflect the latest market assessment and opinion regarding these instruments. b. What are the possible disadvantages’ of using the fair value accounting?