CHAPTER 8: NOTE PAYABLE

Problem 8 1 Multiple Choice (PFRS 9)

1. An entity shall measure initially a note payable not designated at fair value
through profit or loss at

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

2. After initial recognition, an entity shall measure a note payable at

a. Amortized cost
b. Fair value through profit or loss
c. Either amortized cost or fair value through profit or loss
d. Either amortized cost or fair value through other comprehensive income

3. What is the amortized cost of note payable?

a. The amount at which the note payable is initially recognized.

b. The amount at which the note payable is initially recognized minus principal
repayment.
c. The amount at which the note payable is initially recognized plus or minus the
cumulative effective interest amortization of the difference between the initial
carrying amount and maturity amount.
d. The amount at which the note payable is initially recognized minus principal
repayment, plus or minus the cumulative effective interest amortization of the
difference between the initial carrying amount and maturity amount.

4. Under the fair value option, the entity shall measure the note payable initially at

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

5. Which of the following statements is incorrect in relation to the fair value option
of measuring note payable?
a. At initial recognition, an entity may irrevocably designate the note payable as at
fair value through profit or loss.
b. At initial recognition, an entity may revocably designate the note payable as at
fair value through profit or loss.
c. The interest expense on the note payable is recognized using the stated interest
rate.
d. After initial recognition, the note payable is remeasured at fair value at every
year end with changes in fair value recognized partly in other comprehensive
income and partly in profit or loss.