Financial Instruments Flashcards
6 cards from real Certificate in International Financial Reporting practice questions. Tap to flip, then mark Knew It or Still Learning — missed cards come back until you master them.
Read the first 6 Financial Instruments flashcards as text
Under IFRS 9, financial assets are classified into how many measurement categories?
Answer: Three
IFRS 9 has three categories: amortised cost, fair value through OCI (FVOCI), and fair value through profit or loss (FVTPL).
Under IFRS 9, a financial asset is measured at amortised cost if it passes which two tests?
Answer: Business model test (hold to collect) and SPPI test
Amortised cost classification requires the asset to be held to collect contractual cash flows that are solely payments of principal and interest.
Under IFRS 9, the Expected Credit Loss (ECL) model applies to which financial instruments?
Answer: Financial assets measured at amortised cost and FVOCI, and loan commitments
IFRS 9's ECL impairment model applies to debt instruments at amortised cost or FVOCI, and certain off-balance sheet exposures.
Under IFRS 9, Stage 1 of the ECL model requires recognising impairment based on:
Answer: 12-month expected credit losses
Stage 1 covers instruments with no significant increase in credit risk, requiring only 12-month ECL.
Under IAS 32, a financial instrument is classified as equity rather than a financial liability when:
Answer: The issuer has no contractual obligation to deliver cash or another financial asset
IAS 32 classifies instruments as equity when the issuer has no contractual obligation to pay cash.
Under IFRS 7, what is the purpose of disclosures about market risk?
Answer: To show how financial instruments expose the entity to price, interest rate, and currency risk
IFRS 7 requires market risk disclosures including sensitivity analyses for price, rate, and currency risks.
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