In: Accounting
Multiple Choice
Question 1:
Option D. Profit or losses recognized in OCI cannot be recycled to profit and loss account.
The profit or loss recognized in oci for changes in fair value are to be recognized in oci and they are never recycled to profit and loss account as defined in the standard itself.
Question 2 :
Option D. Financial statements measured at Amortised cost.
As the purpose of holding is solely for the purpose of interest and principal amount and to hold till the contract closure. It has to be me as at Amortised cost as sppi test is satisfied.
Question 3:
Option D financial assets can be reclassified if and only if the entity changes it's business model for managing the financial assets.
Financial liabilities reclassification is not in the hands of the entity as it is determined based on the conditions imposed by the loan provider.
Financial assets reclassification can be done when there is a change from held to maturity to held to trading etc.,