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IFRS 9: Financial Instruments Overview

The document outlines the learning objectives and questions related to financial instruments under IFRS 9 for a course at the University of Johannesburg's College for Business and Economics. It includes definitions of financial assets, journal entries for transactions, and specific questions regarding the classification and measurement of financial assets. Students are required to journalize transactions and provide true or false answers with justifications for various statements about financial assets.

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7 views2 pages

IFRS 9: Financial Instruments Overview

The document outlines the learning objectives and questions related to financial instruments under IFRS 9 for a course at the University of Johannesburg's College for Business and Economics. It includes definitions of financial assets, journal entries for transactions, and specific questions regarding the classification and measurement of financial assets. Students are required to journalize transactions and provide true or false answers with justifications for various statements about financial assets.

Uploaded by

thomassahaa
Copyright
© All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PDF, TXT or read online on Scribd

UNIVERSITY OF JOHANNESBURG

COLLEGE FOR BUSINESS AND ECONOMICS

DEPARTMENT OF COMMERCIAL ACCOUNTING

FAC22B2

UNIT 1: Week 1 - Financial Instruments (IFRS 9) (18 marks)

Learning objectives

• Define financial assets and understand what a financial asset is in terms of IFRS 9
• Journalise the purchase of a FA that is classified at FVPL
• Journalise the transaction cost
• Calculate the fair value adjustment at year end and correctly journalise the adjustment
• Calculate and journalise a trade receivable with an insignificant financing component

Question 1 (Gripping GAAP, Chapter 21, Question 21.1 Part A: Financial Assets: Basics –
amended)

Required: Indicate whether the above statements are true or false. Provide a brief reason to
support your answer. (8 marks)

a) In terms of the definition, there are three categories of ‘financial assets’”


• Cash
• Investments in equity instruments of another entity, and
• Contractual rights to receive cash or another financial asset.
b) Prepaid expenses are financial assets
c) Financial assets are always initially measured at acquisition price, irrespective of fair value
on the date of acquisition
d) Investments in government bonds will be classified as subsequently measured at amortised
cost, if the business model of the entity is to hold the bond to collect contractual cash flows,
and the cash flow of the bond are solely payments of the principal and interest on the
principal.

Page 1 of 2
Question 2 (Gripping GAAP Question 21.5 - adapted)

Flighty Limited entered the following transactions during the year ended 30 June 20X9.

Investments Note Transaction FV on transaction


date date

Purchase of ordinary shares in Tiny Limited 1 1 Jan 20X9 R240 000

FV of ordinary shares at year end 30 June 20X9 R270 000

Revenue transaction 2 1 Jan 20X9 R350 000

Note 1: Ordinary shares acquired

Shares in Tiny Limited are held as a long-term investment. Transaction costs of R2 400 were
incurred on acquisition.

Note 2: Revenue Transaction

On 1 Jan 20X9, Flighty sold R350 000 worth of goods to Customer C for R350 000. According to
the contract, payment is due on 30 June 20X9. The accountant determined that there is no
significant financing component related to this transaction.

Required:

Prepare all necessary journal entries to record the above transactions in Flighty Ltd.’s books for the
year ended 30 June 20X9. Your answer must include journal narrations. (10 marks)

Page 2 of 2

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