1.Goodwill arising from an investment in associate is*

Included in the carrying amount of the investment and amortized over the useful life.

Excluded from carrying amount of the investment but charged to retained earnings.

Included in the carrying amount of the investment and not amortized.

Excluded from carrying amount of the investment but charged to expense immediately.

2.Which of the following statements best describes the term "significant influence"?*

The power to participate in the financial and operating policy decisions of an entity.

The mutual sharing in the risks and benefits of a combined entity.

The holding of a significant proportion of the share capital in another entity.

The contractually agreed sharing of control over an economic entity.

Under PAS 39, which of the following is not a category of financial assets?*

Held to maturity investments

Financial assets at fair value through profit or loss

Financial assets at fair value through other comprehensive income

Held for sale investments

3.It is an entity, including an unincorporated entity such as a partnership over which the investor has significant influence and that is neither a subsidiary nor an interest in joint venture.*

Investee

Venture capital organization

Mutual fund

Associate

4.Transaction costs include*

Internal administrative costs

Financing costs

Debt premiums or discounts

Fees and commission paid to agent, levies by regulatory authorities, transfer taxes and duties

5.Property dividends are recorded as*

Return of investment and therefore credited to investment account

Memorandum only

Dividend income at market value of the property

Dividend income at cost of the property

6.Financial assets at fair value through profit or loss include I. Financial assets that are held for "trading", II. Financial assets that are "designated" on initial recognition as at fair value through profit or loss*

Both I and II

Neither I nor II

I only

II only

7.What is the effect of split up?*

Decrease in number of shares and increase in cost per share

Increase in number of shares and increase in cost per share

Decrease in number of shares and decrease in cost per share

Increase in number of shares and decrease in cost per share

8.It is any contract that evidences residual interest in the assets of an entity after deducting all of its liabilities.*

Non marketable financial asset

Equity instrument

Debt instrument

Loan and receivable

9.On the derecognition of an equity investment classified as fair value through other comprehensive income*

The difference between the consideration received and the carrying amount shall be recognized in profit or loss

The difference between the sum of the consideration received and any cumulative gain or loss that has been recognized as component of other comprehensive income and the carrying amount shall be included in retained earnings

The difference between the sum of the consideration received and any cumulative gain or loss that has been recognized as component of other comprehensive income and the carrying amount shall be recognized in profit or loss

The difference between the consideration received and the carrying amount shall be recognized as an adjustment of retained earnings

10. Which of the following is not a financial instrument?*

Gold bullion deposited in bank

Ordinary share capital issued by the entity

Cash deposited in bank

A perpetual debt instrument, meaning no maturity date, that pays interest annually extending into the indefinite future

11. It is any contract that gives rise to both a financial asset of one entity and a financial liability or an equity instrument of another entity.*

Derivative instrument

Debt instrument

Financial instrument

Equity instrument

12. A financial asset is any asset that is (choose the incorrect one)*

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

An equity instrument of another entity.

Cash

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

13. An investor owns 10% of the ordinary share capital of an investee throughout the year. The investee has no preference share capital outstanding. The investor's share gives the right to*

Be paid 10% of the investee's profits in cash each year.

Receive dividends equal to 10% of the total dividend paid by the investee for the year to shareholders.

Receive dividend equal to 10% of the par value each year.

Keep investee from issuing any additional shares unless the investor is willing to buy 10% of the newly issued shares.

14. It is the date on which the stock and transfer book of the corporation is closed for registration. Only those shareholders registered as of this date are entitled to receive dividends.*

Date of record

Date of mailing the dividend stock

Date of payment

Date of declaration

15. What is the effect of stock dividend of the same class?*

No effect on investment account but increase in cost per share

Increase in investment account and increase in cost per share

Decrease in investment account and decrease in cost per share

No effect on investment account but decrease in cost per share

16. A preference share that provides for mandatory redemption on a specific date or at the option of the holder is*

Neither a financial liability nor an equity instrument

An equity instrument

A financial liability

A financial asset

17. Investments in equity instruments that do not have a quoted price in an active market and whose fair value cannot be reliably determined are subsequently measured at*

Fair value

Amortized cost using the straight line method

Cost

Amortized cost using the effective interest method

18. An entity acquired equity shares, representing 5% of the issued ordinary shares of another entity. The investee's shares are listed on a stock exchange. Which of the following categories could this investment in equity shares be classified?*

Held to maturity

Either as available for sale or at fair value through profit or loss

Available for sale

At fair value through profit or loss

19. Financial assets include all of the following, except*

Trade accounts receivable

Loans receivable

Cash in bank

Prepaid expenses

20. Equity instruments include all of the following, except*

Preference shares

Warrants or options that allow the holder to purchase a fixed number of ordinary shares of the issuing entity in exchange for a fixed amount of cash or another financial asset.

Ordinary shares

Corporate bonds and other debt instruments issued by the entity.