Practice Exercise #4-1

D

A financial instrument is any contract that gives rise to which of the following?

A. A financial asset

B. A financial liability

C. A financial asset of one entity and a financial liability of another entity

D. A financial asset of one entity and a financial liability or equity instrument of another entity

C

Which of the following cannot be considered a financial asset?

A. Cash

B. A contractual right to receive cash or another financial asset from another entity

C. A contractual right to exchange financial instruments with another entity under conditions that are potentially unfavorable

D. An equity instrument of another entity

D

Which category includes only debt securities?

A. Investment in associates

B. Investment in FA-FVPL

C. Investment in FA-FVOCI

D. Investment in FA-AC

D

When is a financial asset initially recognized by an entity?

A. A financial asset is recognized when it is probable that future economic benefits will flow into the entity.

B. A financial asset is recognized when the entity obtains control of the instrument.

C. A financial asset is recognized when the entity obtains the risks and

rewards of ownership of the financial asset.

D. A financial asset is recognized when the entity becomes a party to the contractual provisions of the instrument.

D

The following financial assets shall or may be measured at fair value through profit or loss, except:

A. Financial assets held for trading b.

B. Financial assets designated on initial recognition at fair value through profit or loss

C. Investments in quoted equity instruments

D. Financial assets at amortized cost