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What is proper classification of investment in debt security

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Reference no: EM132772428

Problem 1: What is the proper classification of the investment in debt securities if the business model of the investor is to collect contractual cash flows and to sell the financial asset?

a. Financial asset at fair value through profit or loss

b. Financial asset at fair value through other comprehensive income

c. Financial asset at amortized cost

d. Financial asset at cost

Problem 2: What is the accounting treatment of transaction costs related to acquisition of financial asset at fair value through profit or loss?

a. Expensed as incurred and part of profit or loss

b. Recognized as loss in other comprehensive income section

c. Capitalized as part of cost of investment

d. Debited to share premium

Reference no: EM132772428

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