LESSON: Investment at FVPL and FVOCI

Quiz

1. Investments at FVPL and FVOCI are initially measured at.

a. None of the choices
b. Fair value
c. Fair value plus transaction cost
d. Cost less accumulated depreciation
2. Which of the following investment can affect the accounts in the profit or loss?
a. All these choices
b. Investments at amortized cost
c. Investment at FVOCI (mandatory)
d. Investment at FVPL
3. Subsequent changes in the fair value of the financial asset measured at
FVOCI are,
a. Ignored
b. Recognized in OCI.
c. Recognized in OCI and profit or loss.
d. Recognized in profit or loss.
4. The best evidence of fair value for financial assets is,
a. Quoted prices in an active market
b. Price in a recent market transaction
c. Valuation of an expert financial analyst
d. Contract price in binding sales agreement
5. To determine the classification of investment in financial assets, first is
a. To determine the type of the company business model.
b. All these choices
c. To determine the price in recent market transaction
d. To determine the transaction cost
6. Financial assets subsequently measured at amortized cost are initially
recognized at.
a. Fair value
b. Fair value plus transaction cost
c. Cost
d. Invoice cost
7. Which of the following cannot be classified as investment at amortized cost?
a. None of the choices
b. Common shares
c. Zero rated bonds
d. Redeemable preferred shares
8. When an investment at FVOCI (mandatory) is sold,
a. The carrying amount will equal the cash received.
b. The cumulative gains or losses are mandatory classified as OCI.
c. The cumulative gains or losses are recycled to the profit and loss.
d. The cash received will equal the carrying amount.
9. Irrevocable election means,
a. None of the choices
b. That the presentation of the investment shall be classified as non-
current whatever the situation.
c. That the classification of the investment will not be reverted to other
class of investment
d. That the result of winning an election that all voters casted their votes.
10. Investment is made to.
a. All these choices
b. Earn profit.
c. Secure certain financing agreement
d. Serve as protection.
11. MRT inc. purchased the following securities and classified them as an
investment as FVPL. No sales occurred during the year. All declines are
considered to be temporary.

Security Cost Fair value at 12/31/2020

AAA 800,000 750,000
BBX 300,000 350,000
The carrying value of the portfolio of securities on December 31, 2020 on
financial position would be .
a. 1,000,000
b. 100,000
c. 1,100,000
d. Zero
12. A company buys ten shares of securities at 1,000 each on January 15, 2020.
The securities are classified as FVPL. The fair value of the securities
increases by 1,250 each on December 31, 2020. Assume no dividends were
paid. What is the amount of actual gain arising from the securities to be
recognized the profit or loss?
a. 250
b. Zero
c. 12,500
d. 2,500
13. On January 15, 2020, GFO Inc. acquired 10,000 shares of BFO Corp. at 170
per share. The total cost incurred is 4,000. The investment is classified at
FVOCI. The related fair values of the share are as Follows:

December 31, 2020 172

December 31, 2021 168
December 31, 2022 175
What is the cumulative gain or loss as of December 31, 2021?

 If your answer is gain, just write the amount.

 If your answer is loss, write negative sign before your answer.
Answer: - 20,000
14. On January 1, 2020, HUU inc. acquired a 3-year 10% bond at a quoted price
of 970,562.85 plus a transaction cost of 5,000. The bonds will pay the
principal at the end of the third year and interests are paid every year-end.
The company classified the investment at FVOCI, the related quoted price of
the bond is shown below.

December 31, 2020 988,510.15

December 31, 2021 991,990.99
December 31, 2022 1,000,000.00

As of December 31, 2020, what is the unrealized gain or loss from the
investment?

 Write your answer in two decimal places.

 If your answer is gain, just write the amount.
 If your answer is loss, write negative sign before your answer.
Answer: 5,625.39