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Exam 8: Financial Instruments

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Question 21

Multiple Choice

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Which of the following are regarded as financial instruments: I Deposits held by a financial institution; II Ordinary shares; III Raw materials inventories; IV Property, plant and equipment. V Accounts receivable and accounts payable.

A) I, II, IV and V only;
B) II, III and IV only;
C) I, II and V only;
D) I, IV and V only.

E) A) and D)
F) B) and C)

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Question 22

Multiple Choice

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Whitnall Limited lost $150 on a hedging instrument and had a corresponding gain on the hedged item of $100. The effectiveness range for the associated transactions is:

A) 100% - 150%;
B) 20% - 30%;
C) 0% - 15%;
D) 66% - 150%.

E) C) and D)
F) B) and D)

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Question 23

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A financial asset classified as fair value through profit and loss (FVTPL) must be: I $\quad$ a derivative that is a financial guarantee contract or a hedging instrument II $\quad$ acquired princip ally for the purpose of selling it in the near term III $\quad$ part of a portfolio of identified instrument that are managed together and for $\quad$$\quad$ which there is evidence of a recent actual pattern of short-term profit-taking IV $\quad$ designated as such upon initial recognition

A financial liability classified as fair value through profit and loss must be: I $\quad$ a derivative (except for a derivative that is a financial guarantee contract or a $\quad$$\quad$ hedging instrument) II $\quad$ acquired principally for the purpose of selling it in the near term III $\quad$ part of a portfolio of identified financial instruments that are managed together $\quad$$\quad$ and for which there is evidence of a recent actual pattern of short-term profit-taking IV $\quad$ designated as such up on initial recognition

AASB 139 Financial Instruments: Recognition and Measurement, requires that 'Held-to-maturity' investments be initially measured at:

Which of the following items is classified as a financial asset?

Which of the following is NOT an example of a derivative financial instrument?

Callas Corporation Limited buys an option that entitles it to purchase 2000 shares in Maria Limited at $5 per share at any time in the next 3 months. The derivative financial instrument in this transaction is the:

AASB 139 requires that on initial recognition, financial assets and liabilities be measured at: