fect, only a on alone wa ht to do so the rights ancial asse the intention ng because ash flows b ents. or other as ncial liabil lity for whi Co a financ instrume ther enti e financi y cash a ndition the enti financia potentially as equ ntractual bility B and the el bestruments Presentation PROBLEMS PROBLEM 1: MULTIPLE CHOICE Which of the following is within the scope of PAS 32? 337 & Financial assets in the form of investments in subsidiaries, associates and joint ventures. b. Contracts for the delivery or receipt of commodity and other non-financial items that can be settled net in cash or other financial assets. Physical assets, such as inventories and PPE. d. Liabilities arising from constructive obligations. 2 A contract that evidences a residual interest in the entity's assets after deducting all of its liabilities is classified as a. a financial liability. ban equity instrument. c. a or b d. neither a nor b 3. Which of the following statements is incorrect? a. The PAS 32 definition of "equity" reflects the basic accounting equation of "Assets - Liabilities - Equity." b. According to PAS 32, a contract is an equity instrument if it may result in the receipt or delivery of the entity's own equity instruments. c. Entity A issues a compound financial instrument for P1M. If the fair value of the liability component without the equity feature is P.8M, the value to be assigned to the equity component is P.2M. d. An intention to settle a financial asset and a financial liability on a net basis without the legal right to do so is not sufficient to justify offsetting because the rights and obligations associated with the individual financial asset and financial liability remain unaltered. 4 Entity A issues an instrument that is re-purchasable by delivering cash or another financial asset. However, Entity A's