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FVPL FVOCI and Reclassification of Debt Securities Theory

The document discusses the accounting treatment of debt securities classified as FVPL, FVOCI, and reclassification between the categories. It addresses topics like which is held for trading, rules around reclassification, accounting for remeasurement and cumulative gains/losses, and computing new effective interest rates during reclassification. The document is in question format testing understanding of these accounting standards through multiple choice questions.

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cristinelarita18
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11 views2 pages

FVPL FVOCI and Reclassification of Debt Securities Theory

The document discusses the accounting treatment of debt securities classified as FVPL, FVOCI, and reclassification between the categories. It addresses topics like which is held for trading, rules around reclassification, accounting for remeasurement and cumulative gains/losses, and computing new effective interest rates during reclassification. The document is in question format testing understanding of these accounting standards through multiple choice questions.

Uploaded by

cristinelarita18
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as DOCX, PDF, TXT or read online on Scribd
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FVPL, FVOCI, and Reclassification of Debt Securities - Theory

1. Which of the following is true regarding FVPL?


a. It is held for trading for both Debt and Equity securities
b. It is irrevocable designation for Debt Securities
c. It is current asset
d. All of the choices
2. Which of the following is false regarding reclassification of debt securities
a. As a general rule, reclassification is allowed.
b. FVPL designated using irrevocable designation can be reclassified
c. Remeasurement must be done before the reclassification
d. Reclassification must be done at the beginning of the next reporting period
3. Which of the following is false in reclassification of FVOCI debt securities to Amortized cost?
a. There must be remeasurement first, the gain or loss will go to the OCI
b. There must be change in account title, from FVOCI to Amortized cost.
c. The cumulative UG/UL must be eliminated in order to make the carrying amount equal to
amortized cost
d. The new effective interest rate must be computed
4. Which of the following is false in reclassification of FVOCI debt securities to FVPL?
a. There must be remeasurement first, the gain or loss will go to OCI
b. There must be change in account title, from FVOCI to FVPL
c. The cumulative gain or loss must be reclassified to profit or loss
d. The new effective interest rate must be computed
5. When is new effective interest rate is computed?
a. FVOCI to Amortized cost
b. FVOCI to FVPL
c. FVPL to amortized cost
d. FVPL to FVOCI
e. Amortized cost to FVPL
f. Amortized cost to FVOCI
g. Both C and D only

6. Which of the following is true regarding FVPL to FVOCI?


a. There must be remeasurement first, the gain or loss will go to profit or loss
b. There is a need to compute for new effective interest rate
c. The fair value will be the new carrying amount for the FVOCI
d. All of the choices

7. Trading bonds are recorded at


a. Cost
b. Amortized cost
c. Fair value
d. Equity model

8. The cumulative UG/UL in FVOCI


a. Is reported to other comprehensive income
b. Is computed by comparing the fair value beginning and fair value ending less amortization
during the year
c. Is computed by comparing the fair value ending and the carrying amount ending
d. Is not reported in the financial statements
FVPL, FVOCI, and Reclassification of Debt Securities - Theory

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