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    This document contains questions and answers about accounting for investments in associates under the equity method. It also provides important notes on PFRS 9 - Financial Instruments, which supersedes PAS 39 and includes amendments to hedge accounting and classification and measurement of financial assets and liabilities. PFRS 9 is effective January 1, 2018, with early adoption permitted. It establishes three principal classification categories for financial assets based on the entity's business model and the contractual cash flow characteristics of the assets.

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    Toa 333-3 PDF

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    This document contains questions and answers about accounting for investments in associates under the equity method. It also provides important notes on PFRS 9 - Financial Instruments, which supersedes PAS 39 and includes amendments to hedge accounting and classification and measurement of financial assets and liabilities. PFRS 9 is effective January 1, 2018, with early adoption permitted. It establishes three principal classification categories for financial assets based on the entity's business model and the contractual cash flow characteristics of the assets.

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    This document contains questions and answers about accounting for investments in associates under the equity method. It also provides important notes on PFRS 9 - Financial Instruments, which supersedes PAS 39 and includes amendments to hedge accounting and classification and measurement of financial assets and liabilities. PFRS 9 is effective January 1, 2018, with early adoption permitted. It establishes three principal classification categories for financial assets based on the entity's business model and the contractual cash flow characteristics of the assets.

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    © All Rights Reserved
    Download as PDF, TXT or read online from Scribd
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    70 views1 page

    Toa 333-3 PDF

    Uploaded by

    CPA
    This document contains questions and answers about accounting for investments in associates under the equity method. It also provides important notes on PFRS 9 - Financial Instruments, which supersedes PAS 39 and includes amendments to hedge accounting and classification and measurement of financial assets and liabilities. PFRS 9 is effective January 1, 2018, with early adoption permitted. It establishes three principal classification categories for financial assets based on the entity's business model and the contractual cash flow characteristics of the assets.

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    .

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    Krfl 7L {,,*-,, *}*",e4 A,*n,".'t *% TA-333


    IN VESTMENTS - Part 1 of 2
    30. What level of investment in voting stock would lead to the presumPtion that an investor has an ability
    v to exercise significant influence over an associate?
    a. 2oolo or less c. More than 20olo
    0 2oolo or rnor€ d. More than 50o/o
    31. Under the cosf method, cash dividends received by the investor from the investee are recorded as
    fl /d,.t Dividend income
    4. An adclition to the investment account
    c. An addition to the investor's share of the investee's profits
    d. A deduction from the investor's share of the investee's profits
    (t =,
    Under the equih/ method, cAsh dividends received by the investor from the associate are recorded as
    a. Dividend income
    @, A deduction from the investment accotint
    c. An addition to the investor's share of the associate's profits
    d. A deduction from the investor's share of the associate's profits
    33 Under thegqulty method of accounting for investment in associates, the investment account is
    a. Inireased by the share in the earnings of the associates but is not affected by the share in
    the losses of the associates
    b. Decreased by the share in the losses of the associates but is not affected by the share in
    the earnings of the associates
    c Increased by the share in the earnings of the associates and decreased by the share in
    the losses of the associates
    d. Not affected by the share in the earnings or losses of the associates

    c 34. Goodwill arising from an investment in associate is


    a. Charged immediately to profit or loss
    b. Separately recognized as an intangible asset subject to impairment
    c. Included in the carrying amount of the investment and not amortized
    ifi Included in the carrying amount of the investment and amortized over the useful life
    \J
    35. Ax investcrrshatl discontinue tlre uie of e-g\)LtL methed from the date it loses-significant influence over
    U an associate. Upon the loss of significant i-nRuence, the remaining lntere$ffill be valued at
    a. Original cost of the investment
    b. Amortized cost using pffective interest method
    c^ Fair value, with the resulting remeasurement gain or loss included in profit or loss
    10 Fair value, with the resultin! remeasurement gain or loss included in other cornprehensive
    v income

    IMPORTANT NOTES on PFRS 9* FinANCiAI INStruM


    . Effective date: 01 Janua,ry 2018; early adoption is permitted,
    . PFRS 9 supersedes PAS 39 and amends selected disclosure requirernents of PFRS 7.
    . Some of the highlights of PFRS 9:

    A) I:inancial asscts at/irir value (thr<tuglt prof t/loss or other comprehensive income) - FV'I?L/FVTOCI
    l)) l;inanci:rl asscts at onorlized co,st.
    ) A dcbt instrument that meets the following two conditions must be measured at amortized cost (net of any write down for
    inrpainricrrt) urlcss thc asset is design:rted at FVTPL under the fair value option:
    n) IltlSlNIrSS MOI)tlL test: The otrjective of the entity's business modEl is to hold the linancial asset to collect the
    contractual cash fkrws (rather than to sell the instrument prior to its contractual maturity to realize its fair value changes).
    l]) CASII lil.OW CIIARACTERISTIC test: the contractual terms of the financial asset give risc on spccified dates to cash
    lkrrvs that arc solcly payments of principal and interest on the principal amount outstanding.

    l;V l'l)1. undcr the lirir valuc option:


    n) BIISINI;SS MODI1L test: The tinancial asset is held within a business model whosc objective is achieved by both
    collccling contractual cash flows and selling financial.ussels.
    l)) CASII lrl.()W CIIARACI'ERISTIC test:'fhe contraetual terms of the financial asset give rise on specified dates to cash
    llou s thal arc sole ly paymcnts ol'principal and interest on the principal amount outstut ding.
    ) 'l'hc latcst vcrsion (Jul1, 2014 issue) of I'frRS 9 DOES NOT allow reclassification:
    A) Iior cquitl invcslments measurcd at F V [OCI. or
    lI) Whsrc thc lair value option has heen exercised in any circumstance for a financial assets or financial liabilify.
    -l'hc
    ) hedgc accr>unting requirements in PFRS 9 are optional - when an entily lirst applies PFRS 9, it may choose to continue to
    lrppll'rhc hetlge accounting requirements of PAS 39 instead of the requirements of PFRS 9.
    . In a BoA Memo dated May 2012, PFRS 9 is to be included .in the CPA Board Exam for appreciation
    purposes (i.e., basic or fundamental questions might be asked).
    . Per the same memo, however, PAS 39 is still included and'hence shall s&fl be followed in the October
    2017 CPA Board Exam unless the questiqn would explicitlv indicate that PFRS 9 is to be used.

    Page3of3pages

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