IFRS 9

Question 1

Initial recognition of financial liabilities?

Answer 1

FV through SPL - expense transaction costs

Question 2

If there’s no fair value in financial liability?

Answer 2

Deduct carrying amount

Question 3

Subsequent measurement of financial liability?

Answer 3

Amortised cost
Fair value through SPL

Question 4

What is the amortised cost?

Answer 4

Finance cost using effective rate of interest

Question 5

Increase carrying amonut of financial liability?

Answer 5

Debit: Finance cost
Credit: liability

Question 6

Liability is reduced by cash payments made during the year?

Answer 6

Debit: liability
CreditL Cash

Question 7

Cash payment of financial liability treatment?

Answer 7

Part of interest paid in SCF

Question 8

What is done for finance cost?

Answer 8

Opening liability * effective %

Put in SPL

Question 9

What is done with cash payments?

Answer 9

Nominal value * coupon %

Put in SCF

Question 10

What is done with closing liability?

Answer 10

Put in SFP

Question 11

Initial recognition of liability?

Answer 11

Nominal value - discount issued - issue costs

Question 12

Financial liability FV?

Answer 12

Is done through profit or loss

Question 13

When is a financial asset recognised?

Answer 13

When entity becomes party to contractual provisions of the instrument

Question 14

Is financial asset initially recognised at fair value?

Answer 14

Yes

Question 15

Amortised cost for financial asset? (business model)

Answer 15

Asset held within business model in order to collect contractual cash flows

Question 16

Amortised cost for financial asset? (contractual)

Answer 16

Contractual terms of financial asset gives rise to cash flows that are solely payments of principal and interest on principal outstanding

Question 17

Fair value OCI for financial asset (business model)

Answer 17

Asset held within business model in order to collect contractual cash flows and selling financial assets

Question 18

Fair value OCI for financial asset (contractual)

Answer 18

Contractual terms of financial asset gives rise to cash flows that are solely payments of principal and interest on principal outstanding

Question 19

How should losses in financial assets be recognised?

Answer 19

Losses recognised in OCI

Question 20

How should interest income in financial assets be recognised?

Answer 20

Through SPL

Question 21

What if asset does not contractual or business model requirements?

Answer 21

Recognise at FV at a profit or loss

Question 22

FVOCI?

Answer 22

Collect cash flows and sell financial assets

Question 23

FVTPL?

Answer 23

Financial assets that don’t meet criteria for amortised cost or FVOCI

Question 24

What happens with equity component in convertible loan note?

Answer 24

Debit: Loan notes
Credit: Other components of equity

Question 25

What happens with finance cost in convertible loan note?

Answer 25

Debit: Finance costs (interest - cash coupon)
Credit: loan notes

Question 26

Issue costs in a loan?

Answer 26

Deduct from original value. Then put in an expense account