Financial Accounting 2 Quiz
Topics: Bond, Debt / Pages: 11 (3194 words) / Published: Mar 23rd, 2015

Financial Accounting 2 Quiz 15-03008FA Name: ____________________________________________ Course & Section: __________________
General Direction: Write your answer on a separate yellow paper. Pass the test paper and answer sheet after completing the exam.
Part 1 – Theories – Multiple Choice.
1. Transaction whereby a debtor and creditor may negotiate the terms of a financial liability with the result that the liability is fully or partially extinguished by the debtor issuing equity instruments to the creditor.
a. Debt restructuring
b. Assets swap
c. Equity swap
d. Modification of terms

2. If both the fair value of the equity instrument issued and the fair value of financial liability extinguished cannot be measured reliably, the equity instruments issued shall be measured at:
a. Carrying amount of the liability extinguished
b. Par value of the equity instrument issued
c. Book value of the equity instrument issued
d. Fair value of the equity instruments issued

3. The difference between the carrying amount of the financial liability extinguished and the fair value of equity instruments issued or fair value of liability extinguished in the absence of the fair value of equity instruments issued shall be recognized in:
a. Retained earnings
b. Profit or loss
c. Other comprehensive income
d. General reserves

4. Gain / loss from extinguishment of financial liability by issuing equity instruments shall be presented in statement of comprehensive income as:
a. Other income or other expense
b. Separate line item in profit or loss
c. Component of other comprehensive income
d. Component of finance cost

5. There is substantial modification of terms of an old financial liability if the gain or loss on extinguishment is:
a. At least 10% of the new liability
b. At least 10% of the carrying amount of the old liability
c. Less than 10% of the new liability
d. Less than 10% of the carrying amount of the old liability

6. The appropriate valuation of an

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