Problems 5-1 Multiple Choice (PFRS 9)

1. Bonds Payable not designated at fair value through profit loss shall be measured
initially at

a. Fair value
b. Fair value plus bond issue cost
c. Fair value minus bond issue cost
d. Face amount

2. After initial recognition, bonds payable shall be measured at

I. Amortized cost using the effective interest method.

II. Fair value through profit or loss.

a. I only
b. II only
c. Either I or II
d. Neither I nor II

3. The amortized cost of bonds payable means

a. Face amount plus premium on bonds payable

b. Face amount minus discount on bonds payable
c. Face amount minus bond issue cost
d. Face amount plus premium on bonds payable, minus discount on bonds payable
and minus bond issue cost

4. Under the fair value option, bonds payable shall be measured initially at

a. Fair value
b. Fair value plus bond issue cost
c. Fair value minus bond issue cost
d. Face amount

5. Which of the following statement is true in relation to the fair value option of
measuring a bonds payable?
I. At initial recognition an entity may revocably designate a bond payable at fair
value through profit or loss.

II. The bond payable is remeasured at every year-end at fair value and any changes
in fair value and any changes in fair value are recognized in other comprehensive
income.

a. I only
b. II only
c. Both I and II
d. Neither I nor II

ANSWERS:
1. C
2. C
3. D
4. A
5. D