Reference no: EM133001434

Problem 1: Which of the following is correct about debt securities?

Option 1: all debt securities must be measured initially at fair value.

Option 2: an investment qualifies as debt securities if the investor is collecting cash flows representing payment for principal and interest.

Option 3: debt investment if failed with cash flows test must be classified as other short term investment.

Option 4: investor has an option to report investment in debt securities at fair value even if it passed both the cash flows and business model test.

Problem 2: Debt investment must be presented in the statement of financial position:

Option 1: DI@FVTPL as current asset at its amortized cost.

Option 2: DI@FVTOCI as current asset at its fair value.

Option 3: DI@AC as current asset at its amortized cost.

Option 4: DI@FVTOCI as non-current asset at its fair value.

Problem 3: Which category includes debt securities at amortized cost?

Option 1: it fails with cash flows test.

Option 2: it passed the cash flows test and failed on business model test.

Option 3: it is measured at fair value plus transaction cost initially and reported subsequent at amortized cost.

Option 4: it passed both cash flows and business model test with intention of collecting contractual cash flows and to sell when circumstances warrants.