b.
regular way
b. Reclassification of the financial asset from FVPL to Amortized cost
d. January 4, 20x2, ₱15,000
a. ₱2,000 gain in other comprehensive income
1. It refers to purchase or sale of a financial asset under a contract whose terms
require delivery of the asset within the time frame established generally by
regulation or convention in the marketplace concerned.
1 point
a. normal way
c. special way d. no way
2. According to PFRS 9, which of the following represents a commencement of a
financial asset’s impairment accounting?
1 point
a. Reclassification of the financial asset from Amortized cost to FVPL
c. Reclassification of the financial asset from Amortized cost to FVOCI d.
Reclassification of the financial asset from FVOCI to Amortized cost
On December 29, 20x1, an entity commits itself to purchase a financial asset for
₱10,000. The transaction will be settled on January 4, 20x2. On December 31, 20x1
and on January 4, 20x2, the fair value of the asset is ₱12,000 and ₱15,000,
respectively.
3. If the financial asset is measured at fair value through profit or loss and that
the entity uses the settlement date accounting, on what date and at what amount is
the financial asset initially recognized?
1 point
a. December 29, 20x1, ₱10,000 b. January 4, 20x2, ₱10,000
c. January 4, 20x2, ₱12,000
4. If the financial asset is measured at fair value through other comprehensive
income and that the entity uses the trade date accounting, what amount of gain
(loss) on fair value change is recognized on December 31, 20x1 and how is that gain
(loss) recognized?
1 point
b. ₱3,000 gain in other comprehensive income c. ₱2,000 gain in profit or loss
d. zero gain or loss
On Jan. 1, 20x1, Cloudy Day Co. acquires ₱2,000,000 face amount, 10% bonds for
₱1,903,927. The bonds are due on Jan. 1, 20x4 but pay annual interest every Dec.
31. The yield rate is 12%. Cloudy changes its business model for managing financial
assets on Sept. 1, 20x2. Cloudy only reports annually every Dec. 31. The bonds are
quoted at 101 on Sept. 1, 20x2, 103 on Dec. 31, 20x2 and 104 on Jan. 1, 20x3.
c. 115,714 in P/L
b. 80,000 premium
c. 3,600,000
5. The bonds are reclassified from amortized cost to fair value through profit or
loss. How much is the gain (loss) on reclassification and where is that amount
presented?
1 point
a. 128,471 in P/L b. (143,292) in OCI
d. 115,714 in OCI Solutions: page 582
6. The bonds are reclassified from fair value through profit or loss to amortized
cost. What is the amount of premium or discount to be amortized over the remaining
life of the bonds subsequent to the reclassification date?
1 point
a. 80,000 discount
c. c. 115,714 discount d. d. 115,714 premium
Solutions: page 582
7. On March 31, 20x1, Likkig, Inc. declares cash dividends of ₱40 per share to
shareholders of record on April 15, 20x1, to be distributed on April 30, 20x1. On
April 9, 20x1, Ceecee Co. purchases 10,000 Likkig shares for ₱400 per share. The
investment is classified as investment in equity securities measured at FVOCI. How
much is the initial carrying amount of the investment?
1 point
a. 4,000,000 b. 4,400,000
d. 3,890,664
Solutions: page 589 (10,000x400)
(10,000x40)
4,000,000 400,000 3,600,000
8. Devin Co holds 10,000 shares of Eureka, Inc. as investment in equity
securities. On April 1, 20x1, Devin receives shares with fair value of ₱520,000 and
aggregate par value of ₱400,000 as share dividend. How much is the dividend income?
1 point
a. 520,000 b. 400,000 c. 120,000
b. 320,000
c. 50,000
d. 0
Solution: page 590
9. On April 1, 20x1, Jean Co. received ₱480,000 cash dividends, one-third of which
represents liquidating dividends. How much is the dividend revenue?
1 point
a. 160,000
c. 80,000 d. 0
Solution: page 592
(480,000 x 2/3) only non-liquidating portion is recognized as dividend revenue.
10. On March 31, 20x1, Bogart Co. received from its investment in equity securities
10,000 stock rights to subscribe to new shares at ₱60 per share for every 4 rights
held. Immediately after issuance of stock rights, the shares were selling at ₱80
per share. How much is the initial carrying amount of the stock rights?
a. 20,000 b. 40,000
d. cannot be determined Solutions: page 603
80 – 60 4
=5
(10,000 x 5 = 50,000)
