| Posted: 23 Jul 2010 at 19:12 | IP Logged
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Which of the following statements concerning the presentation of financial instruments measured at fair value is/are correct!
I. When some assets and liabilities are measured
using the fair value option and other similar assets and liabilities are
not measured using that option, the two groups and related amounts must
be shown as separate line items in the balance sheet.
II. Because assets and liabilities measured using the
fair value option are adjusted to fair value each period, cash receipts
and cash payments related to those assets and liabilities are not
reported in the statement of cash flows.
 | A.
I only. |
| B.
II only. |
| C.
Both I and II. |
 | D.
Neither I nor II. |
| When some assets and
liabilities are measured using the fair value option and other similar
assets and liabilities are not measured using that option, the two
groups and related amounts do not have to be shown as separate line
items in the balance sheet (Statement I). Both groups can be shown as a
single line item, with the amount measured at fair value shown in
parenthesis. And, just because assets and liabilities measured using
the fair value option are adjusted to fair value each period, that does
not affect the fact that the cash receipts and cash payments related to
those assets and liabilities be reported in the statement of cash flows
(Statement II).
|
Which
of the following statements concerning the presentation of financial
assets and financial liabilities is/are correct for a firm that elects
to use fair value measurement for some, but not all, of its financial
assets and liabilities?
| I. Financial assets and liabilities measured at
fair value must be shown separately in the balance sheet from financial
assets and liabilities not measured at fair value.
|
| II. Cash flows related to financial assets and
liabilities measured at fair value are all classified in the statement
of cash flows as operating activities.
|
| A.
Neither I nor II is correct. |
| B.
I only. |
| Only statement I is
correct. Financial assets and liabilities measured at fair value must
be shown separately in the balance sheet from financial assets and
liabilities measured using another (other than fair value) measurement
method. That separation may be in the form of separate line items or
with the amount measured at fair value shown as a parenthetical amount
on the face of the balance sheet. Statement II is not correct. Cash
flows related to items measured at fair value should be classified as
either operating, investing or financing activities according to their
nature and purpose, not all simply as operating activities.
|
| C.
II only. |
| D.
Both I and II are correct. |
there is confusion considering both question...in bold
__________________
BEC-74,82(lost credit),78
FAR-67,80
AUD-75
REG-68,72,79
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