financial instruments

Question 1

is a financial asset without a contract a financial instrument

Answer 1

no.
thee must be a contract in order for a financial asset =financial instrument

Question 2

journals for financial asset at FVOCI

Answer 2

record…

-purchase of financial asset
-recognize interest
- foreign exchange adjustment
-adjust loss allowance
-redeem

Question 3

journal for purchase of a financial asset

Answer 3

dr financial asset
cr bank

Question 4

journal
interest received on fin as
FVOCI

Answer 4

dr financial asset
dr bank
cr interest income (OCI)

Question 5

redemption of fin as journal

Answer 5

dr bank
cr Fin as

Question 6

fair value adjustment financial asset

Answer 6

gain
dr fin as
cr fair value gain

loss
dr fair value loss
cr fin as

Question 7

why do we need effective interest rate

Answer 7

calculate interest income for a financial asset classified at amortised cost

cr interest income

calc
eff interest rate x initial cost

Question 8

how do we calculate effective interest rate

Answer 8

pv
initial cost + transaction cost
fv
future value
pmt
initial cost x interest rate
n
number of payments left
comp i/y

Question 9

financial liabilities at amortised cost journals

Answer 9

record
1. record issue of debenture
2. capitalise transaction costs to the liability
3. recognise effective interest in p/l
4. record payment of the debenture @ coupon rate

Question 10

journal to record issue od debentures

Answer 10

dr bank
cr financial liabilities at amortised cost

Question 11

transaction costs on financial liability at amortised cost journal

Answer 11

dr financial liability
cr bank

Question 12

interest on financial liability at amortised cost journal

Answer 12

interest expense

dr interest expense
cr financial liability
@ effective interest rate

payment of interest
dr financial liability
cr bank
@ coupon rate