QUIZ 1

1. Financial assets are classified into three, namely:

 Financial assets at fair value through profit or loss

 Financial assets at fair value through other comprehensive income
 Financial assets at amortized cost

ANSWER: TRUE

2. Financial assets at amortized cost include both equity and debt securities.
ANSWER: FALSE
3. When an investment in equity security is held for trading, it shall be measured at fair value through profit or loss.
ANSWER: TRUE

4. When an investment in equity security is held for trading, an entity may make an irrevocable election to measure
the financial assets at fair value through other comprehensive income.

ANSWER: FALSE

5. Transaction costs incurred upon acquisition of financial assets measured at fair value through profit or loss are
outright expenses.

ANSWER: TRUE

6. Which of the following is not a category of financial assets?

 Financial assets at fair value through other comprehensive income

 Available for Sale (AFS)
 Financial assets at amortized cost
 Financial assets at fair value through profit or loss

7. Transaction costs include:

 Fees and commission paid to agent levies by regulatory authorities, transfer taxes and duties
 Internal administrative costs
 Debt premiums or discounts
 Financing costs

8. If the financial asset is measured at fair value through profit or loss, transaction costs directly attributable to the
acquisition shall be:
 Expensed immediately when incurred
 Capitalized as cost of the financial assets
 Deferred and amortized over a reasonable period
 Included as component of other comprehensive income

9. Depending on the business model for managing financial assets, an entity shall classify financial assets subsequent
to initial recognition at:

 Amortized Cost
 Fair value through profit or loss
 Fair value through other comprehensive income
 All of these are used in measuring financial assets

10. Which of the following statements is true?

 Unrealized gain or loss on financial assets at amortized cost are not recognized
 Unrealized gain or loss on financial assets held for trading shall be included in profit or loss
 Unrealized gain or loss on financial assets at fair value through other comprehensive income are not
recognized in the income statement
 All of these are true
11. Raiza Co. acquired a financial asset at its market value of P3,200,000. Broker fees of P200,000 were incurred in
relation to the purchase. At what amount should the financial asset be initially recognized if is classified as at fair
value through profit or loss?

 3,000,000
 3,200,000
 3,400,000
 Cannot be determined

12. Laiza Co. acquired a financial asset at its market value of P1,200,000. Broker fees of P200,000 were incurred in
relation to the purchase. At what amount should the financial asset be initially recognized if is classified as at fair
value through other comprehensive income?

 Cannot be determined
 1,400,000
 1,000,000
 1,200,000

13. On January 1, 2017, Alexis Co. purchased marketable equity securities to be held as trading for P5,000,000. Directly
attributable transaction costs totaled P200,000. No securities were sold during the year. On December 31, 2017,
the securities had a market value of P5,500,000. What amount of unrealized gain or loss should be reported in the
2017 income statement?

 200,000
 300,000
 500,000
 700,000

14. On January 1, 2017, Carmela Co. purchased equity securities to be measured at fair value through other
comprehensive income at P2,000,000. Directly attributable transaction costs totaled P200,000. No securities were
sold during the year. On December 31, 2017, the securities had a market value of P2,500,000. What amount of
unrealized gain or loss should be reported in the other comprehensive income for the year 2017?

 0
 500,000
 700,000
 300,000

15. On January 1, 2016, ABC Company acquired equity securities at P1,000,000 measured at fair value through other
comprehensive income. On December 31, 2016, the securities were valued at P1,100,000, and on December 31,
2017, the same securities were valued at P900,000. No securities were acquired or sold during 2016 and 2017. What
should be the balance of the Unrealized Gain/Loss - OCI to be reported on December 31, 2017?
 100,000 (Dr)
 200,000 (Cr)
 100,000 (Cr)
 200,000 (Dr)