1.Changes in fair value of this type of securities are accumulated as a separate component in the stockholders' equity section of the balance sheet.

a.

Financial assets measured at amortized cost

b.

FVOCI securities

c.

Held for trading securities

d.

Designated financial assets

2.Which category includes only debt securities?

a.

Financial assets measured at amortized cost

b.

FVPL assets

c.

Held for trading securities

d.

FVOCI (election)

3.A correct valuation is

a.investment in equity securities at amortized cost.

b.held for trading securities at amortized cost.

c.debt securities, to be held until maturity to collect cash flows from principal and interests, at fair value.

d.none of these.

4.Securities which could be classified as financial assets measured at amortized cost are

a.investment in stocks.

b.warrants.

c.municipal bonds.

d.treasury stock.

5.Which of the following is not correct regarding held for trading securities?

a.They are held to be sold in a short period of time.

b.Unrealized holding gains and losses are reported as part of profit or loss.

c.Any discount or premium is not amortized.

d.All of these are correct.

6.A debit balance in the "Fair Value Adjustment - FVOCI Securities" account at the end of a year should be interpreted as

a.

the net unrealized holding gain for that year.

b.

the net realized holding gain for that year.

c.

the net unrealized holding gain to date.

d.

the net realized holding gain to date.

7.A debit balance in the "Fair Value Adjustment - Held for Trading Securities" account at the end of a year should be interpreted as

a.

the net realized holding gain to date.

b.

the net unrealized holding gain to date.

c.

the net realized holding gain for that year.

d.

the net unrealized holding gain for that year.

8.Unrealized holding gains or losses which are recognized in profit or loss are from securities classified as

a.amortized cost.

b.FVOCI.

c.held for trading.

d.designated and held for trading.

9.An unrealized holding gain on a company's FVOCI securities should be reflected in the current financial statements as

a.an extraordinary item shown as a direct increase to retained earnings.

b.a current gain resulting from holding securities.

c.a note or parenthetical disclosure only.

d.other comprehensive income and included in the equity section of the balance sheet.

10.Changes in fair value of an investment measured at fair value through other comprehensive income

a. must be recognized in profit or loss.

b. must be recognized directly in equity.

c. may be recognized in profit or loss or directly in equity.

d. must be recognized in other comprehensive income and accumulated in a separate equity account.

11.At initial recognition, an entity may make an irrevocable election to present in other comprehensive income subsequent changes in the fair value of an investment in equity securities within the scope of PFRS 9 that is not held for trading. In accounting for such financial instruments, all of the following are true except

a. amounts presented in other comprehensive income are not be subsequently transferred to profit or loss.

b. the entity may transfer any cumulative fair value gains or losses within equity.

c. dividends received on the investments are recognized in profit or loss.

d. cumulative fair value gains or losses are transferred to profit or loss when the financial asset is derecognized.

12.An entity sells an investment that is measured at FVPL during the year. The realized gain or loss on the sale is computed as

a. the difference between the sale price and the carrying amount of the investment as at the date of sale.

b. the difference between the sale price and the original acquisition cost of the investment.

c. the difference between the net proceeds received from the sale and the carrying amount of the investment as at the date of sale.

d. the difference between the net proceeds received from the sale and the carrying amount of the investment as at the date of sale adjusted for any accumulated fair value gains or losses recognized since the investment was acquired.

13.For which type of investments would unrealized fair value gains and losses be accumulated in an equity account?

a.

Equity method securities

b.

FVOCIsecurities

c.

Held for Trading securities

d.

Held-to-maturity securities

14.If the combined fair value of held for trading securities at the end of the year is less than the fairvalue of the same portfolio of held for trading securities at the beginning of the year, the difference should be accounted for by

a.

reporting an unrealized loss in security investments in the stockholders' equity section of the balance sheet.

b.

reporting an unrealized loss in security investments in profit or loss.

c.

a footnote to the financial statements.

d.

a debit to Investment in Held for Trading Securities.

15.Information regarding Stone Co.'s portfolio of FVOCI securities is as follows:

Aggregate cost as of 12/31/03 170,000

Unrealized gains as of 12/31/03 4,000

Unrealized losses as of 12/31/03 26,000

Net realized gains during 2003 30,000

At December 31, 2002, Stone reported an unrealized loss of 1,500 in other comprehensive income to reduce these securities to market. Under the accumulated other comprehensive income in stockholders' equity section of its December 31, 2003 balance sheet, what amount should Stone report?

a. 26,000c. 20,500

b. 22,000d. 0

16.Caloy Co. bought 1,000 shares from Bayan Co. The shares have no active market, but an identical or similar asset has an active market. The identical asset, however, has multiple markets. Caloy determines that the identical asset has the following market values:

Market A

Market B

Quoted price

500

600

Related transaction cost

25

150

How much is fair valuation of the investment?

a.500,000 c. 450,000

b.475,000d. b or c