Certificate in International Financial Reporting Financial Instruments

Question 1

Under IFRS 9, financial assets are classified into how many measurement categories?

Accepted Answer

Three

Answer

Two

Answer

Four

Answer

Five

Question 2

Under IFRS 9, a financial asset is measured at amortised cost if it passes which two tests?

Accepted Answer

Business model test (hold to collect) and SPPI test

Answer

Business model test (hold to sell) and fair value test

Answer

Liquidity test and credit quality test

Answer

Duration test and coupon test

Question 3

Under IFRS 9, the Expected Credit Loss (ECL) model applies to which financial instruments?

Accepted Answer

Financial assets measured at amortised cost and FVOCI, and loan commitments

Answer

All financial instruments including derivatives

Answer

Only credit cards and mortgages

Answer

Only financial assets at FVTPL

Question 4

Under IFRS 9, Stage 1 of the ECL model requires recognising impairment based on:

Accepted Answer

12-month expected credit losses

Answer

Lifetime expected credit losses

Answer

Incurred losses only

Answer

Full writedown to fair value

Question 5

Under IAS 32, a financial instrument is classified as equity rather than a financial liability when:

Accepted Answer

The issuer has no contractual obligation to deliver cash or another financial asset

Answer

The instrument is listed on a stock exchange

Answer

Dividends are discretionary

Answer

The instrument has no fixed maturity

Question 6

Under IFRS 7, what is the purpose of disclosures about market risk?

Accepted Answer

To show how financial instruments expose the entity to price, interest rate, and currency risk

Answer

To disclose fair values of all assets and liabilities

Answer

To summarise credit ratings of counterparties

Answer

To provide a reconciliation of financial instrument categories