Question #17

Reading: Reading 8 Intercorporate Investments

PDF File: Reading 8 Intercorporate Investments.pdf

Page: 7

Status: Incorrect

Correct Answer: A

Your Answer: C

Part of Context Group: Q17-18 First in Group
Shared Context
- In late 20X6, Company X decided to reclassify the investments in stock. What classification can the company classify the investment in stocks to? A) Fair value through profit or loss or amortized cost. B) Reclassification would not be allowed. C) Fair value through profit or loss only.
Question
The appropriate classification for the investment in government bonds would be:
Answer Choices:
A. amortized cost, fair value through OCI, or fair value through profit or loss
B. amortized cost or fair value through OCI
C. amortized cost or fair value through profit or loss
Explanation
Under IFRS 9 debt securities can be classified at amortized cost (if they meet business model and cash flow characteristic test), fair value through OCI, or fair value through profit or loss.
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