3. Transaction costs incurredthe effective interest rate to be used for amortization of aninvestment in debt security accounted for asA. Increase; Fair value through profit or lossDecrease; Amortized costC. Increase; Fair value through other comprehensive incomeD. Does not affect; Amortized costВ.

Costs incurred during buying and selling any good or a service are generally referred to as…

Answered: Transaction costs incurred the…

Cornerstones of Financial Accounting

4th Edition

ISBN:9781337690881

Author:Jay Rich, Jeff Jones

Publisher:Jay Rich, Jeff Jones

ChapterA2: Investments

Section: Chapter Questions

Problem 7DQ

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2. Which of the following correctly matches the classification of the debt investment with its initial measurement? Classification Initial measurement A. Fair value through other comprehensive income B. Amortized cost C. Fair value through profit or loss Fair value Fair value plus transaction costs Fair value minus transaction costs D. None of the above
Debt investment are initially recorded at: Cost Cost plus accrued interest Fair value None of the above
what of the following is the correct calculation for interest cover : a- total debt / interest payable b- interest payable / total debt c- operating profit / interest payable d- interest payable / operating profit
7. Which of the following is not one of the factors impacting the borrowing rate of repo assets? OA Quality of the collateral OB. Terms of the repo OC. Delivery requirements O D. Denomination of the asset OE Seasonal factors
1. Which of the following may be measured subsequently at amortized cost?a. None of theseb. A non-derivative equity instrumentc. A derivalived. A non-derivative debt instrument 2. An investment in equity instrument may not be classified as a financial asset subsequently measured ata. Fair value through other comprehensive incomeb. Amortized costc. Fair value through proft or lossd. None of these 3. Significant influence isa. The contractually agreed sharing of control of an arrangement, which exists only when decisions about the relevant activities require the unanimous consent of the parties sharing control.b. The power to govern the financial and operating policies of an entity so as to obtain benefits from its activities.c. The power to participate in the financial and operating policy decisions of the investee but is not control or joint control over those policies.d. Deemed to exist when the investor is exposed, or has rights, to variable returns from its involvement with the…
Interest revenue for debt investments at fair value through other comprehensive income is computed based on the instruments’ a. face value using the effective interest rate. b. face value using the nominal interest rate. c. carrying amount using the effective interest rate. d. carrying amount using the nominal interest rate.
Financial liabilities that are classified as amortized cost are subsequently measured at A. Partly at profit or loss and partly at other comprehensive income depending on the risk. B. Fair value with changes in value recognized in other comprehensive income. (FVPL) C. Fair value which changes in value recognized in profit or loss. (held for trading) D. The present value of the remaining cash flows of the instrument discounted at the original effective interest rate.
Evaluate the following statements:S1. Capitalization of borrowing cost is mandatory for a qualifying asset.S2. For general borrowing, the capitalizable borrowing cost is equal to the average expenditures of the asset during the period multiplied by the average interest rate. a. True, True b. True, False c. False, False d. False, True
Debt issuance costs are: Accounted for as a deduction from the equity balance on the balance sheet Recognized initially as a current liability on the balance sheet Amortized over the term of the related debt liability Expensed on the income statement when the transaction occurs Which one is the correct answer please?
The default subsequent measurement base for financial liabilities is: Select one: amortised cost through profit or loss fair value using the effective interest rate. amortised cost using the effective interest rate fair value through profit or loss
(i). Debt investments not plan to sell reported at a. amortized cost. b. fair value. c. the lower of amortized cost of fair value. d. net realizable value. (ii). which of the following caa be reported at fair value? a. Debt investments. b. Equity investments. c. Both debt and equity investments: d None of these answers' choices are correct.

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