Held-to-maturity investments Loans and receivables

Chapter 20 – Financial Instruments Page 294 5. Are the following statements about treasury shares true or false, according to IAS32 Financial instruments: presentation? 1 Treasury share purchases are recognised as financial assets. 2 Any gain or loss on purchasing treasury shares is recognised in profit or loss. Statement 1 Statement 2 A False False B False True C True False D True True 6. Are the following statements true or false, according to IAS32 Financial instruments: presentation? 1 Transaction costs of issuing equity instruments are charged against income. 2 The components of a compound financial instrument are classified separately in accordance with their substance. Statement 1 Statement 2 A False False B False True C True False D True True 7. The Tootakk Company has entered into a contract on 1 June 20X3 that requires it to issue its own ordinary shares with a value of CU250,000 on 31 May 20X6. In accordance with IAS32, Financial instruments: presentation, Tootakk should classify the contract as select one answer A a financial asset B a financial liability C an equity instrument D an embedded derivative Chapter 20 – Financial Instruments Page 295 8. Which TWO of the following are types of hedging relationship as defined by IAS39 Financial instruments: recognition and measurement? A Cash flow hedge B Credit risk hedge C Interest rate hedge D Fair value hedge 9. Are the following statements concerning the measurement of financial instruments after initial recognition true or false, according to IAS39 Financial instruments: recognition and measurement? 1 Held-for-trading financial assets are measured at amortised cost. 2 Held-to-maturity investments are measured at fair value. Statement 1 Statement 2 A False False B False True C True False D True True 10. In accordance with IFRS7 Financial instruments: disclosures, which ONE of the following best describes the risk that an entity will encounter difficulty in meeting obligations associated with financial liabilities? A Credit risk B Financial risk C Liquidity risk D Payment risk 11. In accordance with IFRS7 Financial instruments: disclosures which TWO of the following are components of market risk? A Credit risk B Currency risk C Interest rate risk D Liquidity risk