IAS 39 Financial Instruments

Which of the following items is not a financial instrument?

An electricity purchase contract that meets the entity’s normal purchase and usage requirements

Cash deposited in banks

Investments in debt instruments

Trade accounts receivable

Which of the following liabilities is a financial liability?

A preference share that gives the holder the right to require the issuer to redeem the share on a particular date for a specific amount

Deferred revenue from a sale contract

A provision created because of a constructive obligation

A warranty obligation from the sale of goods

Which of the following is not a category of financial assets defined in IAS 39?

Loans and receivables

Non current assets held-for-sale

Financial assets at fair value through profit or loss

Available-for-sale financial assets

Which of the following characteristics is not one of those relating to financial assets classified as held-to-maturity investments?

They are quoted in an active market

They have fixed or determinable payments and a fixed maturity

There is a positive intention and ability to hold them until maturity

The holder can recover substantially all of its investment

Which of the following characteristics is not one of those relating to financial assets classified as loans and receivables?

There is a positive intention and ability to hold them until maturity

They have fixed or determinable payments

The holder can recover substantially all of its investment (unless there has been a credit deterioration)

They are not quoted in an active market

Which of the following categories of financial assets is measured at fair value in the balance sheet?

Investments in unquoted equity instruments

Available-for-sale financial assets

Loans and receivables

Held-to-maturity investments

On initial recognition, a financial instrument is measured at which of the following amounts?

Recoverable amount

Fair value

Consideration paid or received plus any directly attributable transaction costs relating to the financial instrument

Consideration paid or received excluding transaction costs relating to the financial instrument

Which of the following financial instruments would be valued at cost?

A share for which no active market exists but for which there are quoted prices available

A bond that is not quoted in an active market

A share that is not quoted in an active market and whose fair value cannot be measured reliably

A share quoted on a stock exchange

On 1 January 2006, Entity A purchases a bond in the market for GBP539,930. The bond has a principal amount of GBP500,000 that will be repaid on 31 December 2010. The bond has a stated rate of 10% payable annually and the effective interest rate for the bond is 8%. The bond is classed as a held-to-maturity investment. Calculate the carrying amount for the bond at 31 December 2006

GBP533,124

GBP500,000

GBP489,930

GBP539,930

A bond is classified as available for sale and is purchased at a premium. The par value is GBP200,000 and the premium is GBP3,000. In addition, transaction costs of GBP2,500 are incurred. Additionally a debt security is purchased for GBP100,000 and is held for trading. The transaction costs were GBP1500. Calculate the initial carrying amount for these two financial instruments

Bond: GBP205,500, debt security: GBP100,000

Bond: GBP203,000, debt security: GBP101,500

Bond: GBP200,000, debt security: GBP101,500

Bond: GBP200,000, debt security: GBP100,000

IAS 39 Financial Instruments

Which of the following items is not a financial instrument?

Which of the following liabilities is a financial liability?

Which of the following is not a category of financial assets defined in IAS 39?

Which of the following characteristics is not one of those relating to financial assets classified as held-to-maturity investments?

Which of the following characteristics is not one of those relating to financial assets classified as loans and receivables?

Which of the following categories of financial assets is measured at fair value in the balance sheet?

On initial recognition, a financial instrument is measured at which of the following amounts?

Which of the following financial instruments would be valued at cost?

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