The classification and therefore subsequent measurement of financial assets depends on.? Select one: O a The business model of the reporting entity considering management's intention of holding the portfolio of financial assets. O b. The specifications of the external auditors. O . Maturity and cash flows received on maturity of the financial assets O d. The amount and terms of payment for the purchase of the financial assets.
The classification and therefore subsequent measurement of financial assets depends on.? Select one: O a The business model of the reporting entity considering management's intention of holding the portfolio of financial assets. O b. The specifications of the external auditors. O . Maturity and cash flows received on maturity of the financial assets O d. The amount and terms of payment for the purchase of the financial assets.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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![The classification and therefore subsequent measurement of financial assets depends on.?
Select one:
O a. The business model of the reporting entity considering management's intention of holding the portfolio of financial assets.
O b. The specifications of the external auditors.
O c Maturity and cash flows received on maturity of the financial assets
O d. The amount and terms of payment for the purchase of the financial assets.
CLimited is a stock broking firm in the business of buying and selling shares on the JSE (Johannesburg Securities Exchange) on behalf of its clients
and on its own behalf. On 1 December 2015, C Limited bought, on its own account, 10 000 shares of D Limited when the market price was R40. The
share price of D Limited rose drastically to R60 and on 31 March 2016, C Limited sold 5 000 of the D Limited shares.
Assuming that the year-end of C Limited is 31 March each year and that the corporate tax rate is 28% for 2016 and that only 70% of capital gains
are taxable, answer the questions that follow.
What amount will be recorded on the statement of financial position as investment in D Limited (financial asset) as at 31 March 2016?
Select one:
O a. R400 000
O b. R200 000
O c. R600 000
O d. R300 000
Which of the following statements are correct regarding dividends component in the purchase price of shares?
O The fair value of a share purchased cum-dividend is the quoted price of the share on the stock market.
(m) The fair value of a share purchased cum-dividend is the quoted price of the share on the stock market less dividend portion in the share price
(ii) The fair value of a share purchased ex-dividend is the quoted price on the stock market.
(m) The dividend component has no influence in the accounting treatment of the investment in the shares
Select one:
O a. (1) and (iv) only
O b. (). (i). (ii) and (iv)
O c (). (i) and (ii) only
O d. (ii) and (i) only](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F07d51655-01fb-4dc4-ada1-806cae3b5823%2Fb11dc7e4-98a7-4c27-b004-254443b5564c%2F6xqtf7_processed.jpeg&w=3840&q=75)
Transcribed Image Text:The classification and therefore subsequent measurement of financial assets depends on.?
Select one:
O a. The business model of the reporting entity considering management's intention of holding the portfolio of financial assets.
O b. The specifications of the external auditors.
O c Maturity and cash flows received on maturity of the financial assets
O d. The amount and terms of payment for the purchase of the financial assets.
CLimited is a stock broking firm in the business of buying and selling shares on the JSE (Johannesburg Securities Exchange) on behalf of its clients
and on its own behalf. On 1 December 2015, C Limited bought, on its own account, 10 000 shares of D Limited when the market price was R40. The
share price of D Limited rose drastically to R60 and on 31 March 2016, C Limited sold 5 000 of the D Limited shares.
Assuming that the year-end of C Limited is 31 March each year and that the corporate tax rate is 28% for 2016 and that only 70% of capital gains
are taxable, answer the questions that follow.
What amount will be recorded on the statement of financial position as investment in D Limited (financial asset) as at 31 March 2016?
Select one:
O a. R400 000
O b. R200 000
O c. R600 000
O d. R300 000
Which of the following statements are correct regarding dividends component in the purchase price of shares?
O The fair value of a share purchased cum-dividend is the quoted price of the share on the stock market.
(m) The fair value of a share purchased cum-dividend is the quoted price of the share on the stock market less dividend portion in the share price
(ii) The fair value of a share purchased ex-dividend is the quoted price on the stock market.
(m) The dividend component has no influence in the accounting treatment of the investment in the shares
Select one:
O a. (1) and (iv) only
O b. (). (i). (ii) and (iv)
O c (). (i) and (ii) only
O d. (ii) and (i) only
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