For a debt investment to be held under amortized cost, it must pass two tests. One of these is the
contractual cash flow characteristics test.
What is the other test which must be passed?

What is the default classification for an equity investment?

Diamond Limited purchased 10,000 shares on 1 September 2014, making the election to use the
alternative treatment under IFRS 9. The shares cost Rs. 35 each. Transaction costs associated with
the purchase were Rs. 5,000.
On 31 December 2014, the shares are trading at Rs. 45 each.
What is the gain to be recognized on these shares for the year ended 31 December 2014?

Copper Limited has purchased an investment of 15,000 shares on 1 August 2016 at a cost of Rs.
65 each. Copper Limited intends to sell these shares in the short term and is holding them for
trading purposes. Transaction costs on the purchase amounted to Rs. 15,000.
As of the year-end 30 September 2016, these shares are now worth Rs. 77.5 each.
What is the gain on this investment during the year ended 30 September 2016, and where in the
Financial Statements will be recognized?

For which category of financial instruments are transaction costs excluded from the initial value, and
instead, expensed to profit or loss?

If a company had incurred transaction costs in issuing debentures, how should these have been
accounted for?

Sodium Limited (SL) purchased a debt instrument that will mature in five years’ time. SL intends
to hold the debt instrument to maturity to collect interest payments. How should this debt instrument
be measured in the financial statements of SL?

A 5% debenture was issued on 1 April 2010 at a total face value of Rs. 20 million. Direct costs of the
issue were Rs. 500,000. The debenture will be redeemed on 31 March 2013 at a substantial
premium. The effective interest rate applicable is 10% per annum.
At what amount will the debenture appear in the statement of financial position as of 31 March
2012?

How does IFRS 9 Financial Instruments require investments in equity instruments to be measured
and accounted for (in the absence of any election at initial recognition)?

On 1 January 2011 Oxygen Limited purchased a debt instrument for its fair value of Rs. 500,000. It
had a principal amount of Rs. 550,000 and was due to mature in five years. The debt instrument
carries fixed interest of 6% paid annually in arrears and has an effective interest rate of 8%. It is
held at amortized cost. At what amount will the debt instrument be shown in the statement of
financial position of Oxygen Limited as of 31 December 2012?

Which of the following are not classified as financial instruments under IAS 32?

In order to hold a debt instrument at amortized cost, which TWO of the following tests must be
applied?

Nickel Limited is uncertain of how to treat professional fees. For which of the following investments
should professional fees NOT be capitalized as part of the initial value of the asset?

Iron Limited has 5% Rs. 30 million redeemable preference shares in issue which will be redeemed
in 5 years’ time.
How should the preference share capital and preference dividend be presented in the financial
statements of Iron Limited?

Mercury Limited purchased 1 million shares in Jupiter Limited, a listed company, for Rs. 40 million
on 1 January 2017. By the year-end, 31 December 2017, the fair value of Jupiter Limited’s share
had moved to Rs. 48. If Mercury Limited were to dispose of the shares, broker fees of Rs. 500,000
would be incurred.
What is the correct treatment for shares at year-end?

Gold Limited’s draft statement of financial position as of 31 March 2018 shows financial assets at
fair value through profit or loss with a carrying amount of Rs. 12.5 million as of 1 April 2017.These
financial assets are held in a fund whose value changes directly in proportion to a specified market
index. On 1 April 2017 the relevant index was 1,200 and on 31 March 2018, it was 1,296. What amount
of gain or loss should be recognized on 31 March 2018 in respect of these assets?

On 1 January 2018 Silver Limited purchased 40,000 Rs. 10 listed equity shares at a price of Rs. 30
per share. An irrevocable election was made to recognize the shares at fair value through other
comprehensive income.
Transaction costs were Rs. 30,000. At the year-end of 31 December 2018, the shares were trading
at Rs. 60 per share.
What amount in respect of these shares will be shown under ‘investments in equity instruments’ in
the statement of financial position as of 31 December 2018?

An entity acquires a 6% Rs. 1,000 Term Finance Certificate (TFC), a financial asset, for Rs. 970 at
the beginning of Year 1. Interest is receivable annually in arrears.
The TFC is redeemable at the end of Year 3 at a premium of 3%. The financial asset is measured
at amortized cost. The effective interest rate of the financial instrument has been calculated at 8.1%.
Calculate the closing statement of the financial position figure at the end of Year 2. Work to the nearest
Rupee.

Wasim Limited issued Rs. 10 million 5% debentures on 1 January 2019, incurring issue costs of
Rs.400,000. The debentures are redeemable at a premium, giving them an effective interest rate of
8%.
What expense should be recorded in relation to the debentures for the year ended 31 December
2019?

Platinum Limited issues Rs.100 million 5% debentures on 1 January 2014, incurring issue costs of
Rs.3 million.
These debentures are redeemable at a premium, meaning that the effective rate of interest is 8%
per annum.
What is the finance cost to be shown in the statement of profit or loss for the year ended 31
December 2015?

Rs. ___________ million (rounded to two decimal points)