Consider the following six investments: a. Atlantic Company buys 5,000 common shares of a publicly traded company
Question:
Consider the following six investments:
a. Atlantic Company buys 5,000 common shares of a publicly traded company that has 200 million shares outstanding.
b. Beetleweed buys $20,000 in bonds maturing in five years.
c. A bank lends $400,000 to a person to purchase a home.
d. An exporter enters into a currency swap (a derivative contract) to secure the Canadian dollar price of a sale.
e. Elite Cars buys 800,000 shares in Selective Autos.
f. Fanciful Gifts buys 3,000 preferred shares in another company. These shares have no voting rights.
Required:
Under IFRS 9, financial assets can be put into one of seven categories: subsidiaries, joint operations, joint ventures, associates, FVPL, FVOCI, and amortized cost. For each of the above investments, identify the possible categories into which it can be placed. More than one category is possible for some items.
Step by Step Answer: