Financial Assets

Question 1

How is a financial asset initially measured?

Answer 1

At FV - transaction costs

Unless classified through FVTPL

Question 2

Examples of financial asset?

Answer 2

Debt instrument
Loan note

Question 3

Subsequent measurement for financial asset (FVTPL) Transaction costs

Answer 3

Recognised immediately through SPL

Question 4

Subsequent measurement for financial asset (FVTPL) Remeasurement

Answer 4

Remeasure to fair value at reporting date, gains and losses in SPL

Question 5

What do I need to determine when initially measuring financial asset?

Answer 5

FVTPL
FVTOCI
Amortised cost

Question 6

FVTOCI subsequent measurement?

Answer 6

Remeasure to fair value with gains or losses through OCI. Don’t expense transaction costs

Question 7

When is FVTOCI used?

Answer 7

When a financial asset is being used for the long-term

Question 8

What does amortised cost usually apply to?

Answer 8

Investment in debt

Question 9

When is an asset measured at amortised cost?

Answer 9

Intents to hold asset until maturity date
I have an obligation to receive cash

Question 10

Initial measurement double entry (FVTPL)?

Answer 10

Debit Investment (SFP)
Credit Bank

Debit Transaction costs (SPL)
Credit: Bank

Question 11

Subsequent double entry (FVTPL) deduction in fair value?

Answer 11

Debit Bank
Credit Investment (SFP)

Question 12

FVTPL calculations?

Answer 12

(Shares * share cost) - (Shares * FV)

Question 13

FVTOCI keyword in question?

Answer 13

Long-term strategy (The intent to hold)

Question 14

Initial measurement double entry (FVTOCI) and calculations?

Answer 14

Debit: Investment (SFP)
Credit: Bank + Transaction costs

Question 15

FVTOCI calculations subsequent?

Answer 15

FV - (Shares + transaction costs)

Question 16

Subsequent measurement double entry (FVTOCI)?

Answer 16

Debit: Investment
Credit: OCI

Question 17

Effective interest rate?

Answer 17

Added to the initial value of financial asset

Question 18

Interest received?

Answer 18

Deducted from inital value of financial asset

Question 19

What is the coupon rate?

Answer 19

A promise for amount of money we’ll receive annually

Question 20

Cash payment calculation amortised cost and double entry?

Answer 20

Debentures * par value * (1 - discount rate)

Debit: Investment
Credit: Bank

Question 21

Coupon interest calculation amortised cost

Answer 21

Coupon rate * debentures * par value

Question 22

Redemption calculation amortised cost?

Answer 22

Par value * (1 + share premium) * Debentures

Question 23

Amount of cash received?

Answer 23

Redemption + coupon interest

Question 24

Amount of interest received amortised cost calculation and dobule entry?

Answer 24

Cash received - cash payment

Debit: Investment
Credit: Interest receivable (SPL)

Question 25

Where is interest receivable put in amortised cost?

Answer 25

In SPL

Question 26

Where is c/f of investment put in amortised cost?

Answer 26

in SFP

Question 27

Purchasing bonds with intention to keep the bonds? Only interest and capital on the bond

Answer 27

Amortised cost

Question 28

Purchasing bonds with intention to keep and sell bonds? Only interest and capital on bond

Answer 28

FVTOCI

Question 29

Purchasing bonds for other scenarios?

Answer 29

FVTPL

Question 30

Purchasing shares and keeping them?

Answer 30

FVTOCI

Question 31

Purchasing shares and selling them?

Answer 31

FVTPL

Question 32

Is the interest paid always a fixed amonut?

Answer 32

Yes