IFRS: Financial Instruments

Question 1

Examples of cash equivalents

Answer 1

_drawn bank overdrafts (deduction from cash equivalent)
_investment in money mkt funds
_term deposit maturing in <=3 months
_T-bill maturing in <=3 months

Question 2

Examples of restricted cash

Answer 2

_minimum balance requirements w bank
_funds held in escrow
_restricted donation funds @ NFP

Question 3

2 conditions for holding AR at amortized cost

Answer 3

_business model objective is to collect contractual cash flows
_contractual terms give rise on specified dates to cash flows that are solely payments of principal and interest on principal outstanding

Question 4

3 categories of passive investments

Answer 4

1. fair value through profit or loss
2. amortized cost
3. fair value through other comprehensive income

Question 5

FVTPL: transaction costs of purchasing are expensed or capitalized?

Answer 5

expensed

Question 6

Examples of amortized cost financial instruments

Answer 6

_bank deposits
_AR balances
_redeemable preferred shares
_bonds held to maturity

Question 7

Amortized cost financial instruments: transaction costs on purchasing are expensed or capitalized?

Answer 7

capitalized (added to cost on balance sheet)

Question 8

Amortized cost financial instruments: what interest rate is used to discount present value of future CFs?

Answer 8

the asset’s original effective interest rate

Question 9

ASPE difference: subsequent measurement of financial assets

Answer 9

_equity instruments quoted in an active mkt & certain derivatives are measured at fair value
_ALL other financial assets are recorded at amortized cost
_no OCI