IFRS Are we good to go - IFRS 9 W11

Which of the following are not classified as financial instruments ?

• Share options

• Intangible assets

• Trade receivables

• Redeemable preference shares

A 5% loan note was issued on 1 April 2020 at its face value of $20 million. Direct costs of the issue were $500,000. The loan note will be redeemed on 31 March 2023 at a substantial premium. The effective interest rate applicable is 10% per annum.

At what amount will the loan note appear in the statement of financial position as at 31 March 2021?

• 21,000,000

• 20,450,000

• 22,100,000

• 21,495,000

Which of the following is not part of the definition of a financial instrument?

• Financial asset

• Financial liability

• Financial income

• Equity instrument

Entity A enters into a contract to purchase gold bullion from Entity B. Which of the following would result in the contract being considered a financial instrument?

• If Entity A pays cash to Entity B upon receipt of the gold bullion.

• If Entity A and Entity B agree to settle the contract net in cash.

• If Entity B recognises Entity A as a debtor when the gold bullion is transferred.

• If the contract includes a clause to account for the exchange of gold bullion as a financial asset.

Entity A purchased a financial asset that would give rise to cash flows that are not solely related to principal and interest repayments. The purchase price was $30,000 and the transaction costs related to the purchase was $1,000. The fair value on the date of purchase was $31,000. On this date, Entity A anticipated that the fair value of the financial asset would increase to $32,000 during the financial period.

Which of the following amounts would be correct upon initial recognition?

• 29,000

• 30,000

• 31,000

• 32,000

Which of the following is an example of a non-financial item?

• Cash

• Debtors

• Creditors

• Inventory

How does IFRS 9 Financial Instruments require investments in equity instruments to be measured and accounted for (in the absence of any election at initial recognition)?

• Fair value with changes going through profit or loss

• Fair value with changes going through other comprehensive income

• Amortised cost with changes going through profit or loss

• Amortised cost with changes going through other comprehensive income

Entity A issued 500 notes each worth $100 on 1 January 2016. The notes mature on 31 December 2019. The effective interest rate is 8% and the coupon rate payable in arrears is 6% per annum. What is the closing balance of the notes on 31 December 2016?

• 39,690

• 41,981

• 47,423

• 46,688

IFRS 9 uses a mixed model approach to measurement. Which of the following measurement methods are acceptable under IFRS 9?

• Amortised cost and fair value

• Amortised cost, fair value and depreciated replacement cost

• Amortised cost, fair value and net realisable value

• Amortised cost, fair value and replacement cost

Under what circumstances can the profit or loss on an equity instrument carried at fair value be dealt with in Other Comprehensive Income?

• When the equity investment is available for sale

• When the profit or loss is capable of recycling

• When the equity investment is held for trading

• When the equity investment is not held for trading