Chapter 12B

Question 1

Is an entity prohibited to sell ay of the debt securities under held-to-maturity before the related maturity date?

Answer 1

No

Question 2

How are debt securities under amortized costs measured initially?

Answer 2

fair value plus transaction costs

Question 3

How are debt securities under amortized costs measured subsequently?

Answer 3

at amortized cost amounts based on amortization table

Question 4

How are changes in fair value treated in amortized cost?

Answer 4

They are ignored

Question 5

How is interest income computed under amortized cost?

Answer 5

Beginning-of-the-period amortized cost multiplied by effective interest rate on initial recognition

Question 6

How are premiums and discounts accounted for at amortized cost?

Answer 6

Amortized

Question 7

This represents the present value of the remaining cash flows discounted using the effective interest rate determined on initial recognition.

Answer 7

Amortized cost

Question 8

This method of amortizing premium or discount is the simplest among the methods. There are equal amounts of discount or premium amortization per period. It is used when the initial fair value is computed using quoted price approach.

Answer 8

Straight-line method

Question 9

This method of amortizing premium or discount is based on the remaining face amount of debt security. It is used for serial bonds when the initial fair value is computed using quoted price approach.

Answer 9

Bond-outstanding Method

Question 10

This method of amortizing premium or discount uses effective interest rate that exactly discounts estimated future cash payments through the expected life of the financial asset to the carrying amount of a financial asset. This is used when the initial fair value is computed using the present value approach.

Answer 10

Effective Interest Method

Question 11

This method of amortizing premium or discount is the only one in accordance with the requirements of PFRS 9.

Answer 11

Effective Interest method