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BSA 12 Which statement is correct concerning recognition of unrealized gains and losses on financial assets? I. Unrealized gains and losses on financial assets held for trading shall be included I profit or loss. II. Unrealized gains and losses on financial assets measured at amortized cost shall be...

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BSA 12

1. Which statement is correct concerning recognition of unrealized gains and losses on financial assets? I. Unrealized gains and losses on financial assets held for trading shall be included I profit or loss. II. Unrealized gains and losses on financial assets measured at amortized cost shall be included as component of other comprehensive income. a. b. c. d.

I only II only Both I and II Neither I and II

2. Which statement is correct concerning subsequent measurement of financial asset at fair value? I. 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 flows are not solely payments of principal and interest. II. An entity may designate a financial asset as measured at fair value at fair value through profit or loss even if the financial asset satisfies the amortized cost measurement. a. I only b. II only c. Both I and II d. Neither I and II 3. Under PFRS 9, a financial asset shall be measured subsequently at amortized cost when I. The business model of the entity is to hold the financial asset in order to collect contractual cash flows on specified dates. II. The contractual cash flows are solely payments of principal and interest on the principal amount outstanding. a. I only b. II only c. Either I or II d. Both I and II 4. Depending on the business model for managing financial assets, an entity shall classify financial assets subsequent to initial recognition at a. Fair value

b. Amortized cost c. Either fair value or amortized cost d. Neither fair value nor amortized cost 5. Under PAS 39, which of the following items is not precluded from classification as held to maturity investment? a. An investment in an unquoted debt instrument. b. An investment in a quoted equity instrument. c. A quoted derivative financial asset. d. An investment in a quoted debt instrument. 6. What is the best evidence of fair value of a financial instrument? a. Its cost, including transaction costs directly attributable to the purchase origination or issuance of the financial instrument. b. Its estimated value determined using discounted cash flow technique, option pricing model or other valuation technique. c. It’s quoted price, if an active market exists for the financial instrument. d. The present value of the contractual cash flows less impairment. 7. The effective interest method of amortizing bond discount provides for a. Increasing amortization and increasing interest income. b. Increasing amortization and decreasing interest income. c. Decreasing amortization and increasing interest income. d. Decreasing amortization and decreasing interest income. 8. The effective interest rate on bonds is higher than the stated rate when bonds sell a. At face value b. Above face value c. Below face value d. At maturity value 9. An investor purchased a bond as a long-term investment on January 1. Annual interest was received on December 31. The investor’s interest income for the year would be higher if the bond was purchased at a. Par b. Face value c. A discount d. A premium 10. The interest rate written on the face of bond is known as

a. b. c. d.

Nominal rate Coupon rate Stated rate Nominal rate, coupon rate or stated rate...