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10 Questions

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Financial Reporting of Liabilities

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Questions and Answers

What is the primary purpose of holding a liability that is considered as held for trading?

For selling or repurchasing in the near term (correct)

For long-term investment

For hedging purposes

For research and development

What is the normal operating cycle of an entity that has an account payable due to be paid in 15 months?

20 months

24 months

12 months

18 months (correct)

Which of the following is NOT a criterion for a liability to be considered as held for trading?

It is acquired for the purpose of selling or repurchasing it in the near term

It is a long-term investment (correct)

It is part of a portfolio of identified financial instruments

There is evidence of recent actual pattern of short-term profit-taking

What is the classification of a financial liability at FVTPL that is irrevocably designated as such on initial recognition?

Non-current Signup and view all the answers

Which of the following is an example of a liability that is usually classified as current?

Derivative liability Signup and view all the answers

What is the purpose of classifying liabilities as current or non-current in the statement of financial position?

To distinguish between short-term and long-term debts Signup and view all the answers

When is a liability classified as current?

If all of the above criteria are met Signup and view all the answers

What is the normal operating cycle of an entity?

The time between the acquisition of assets and their realization in cash or cash equivalents Signup and view all the answers

Which of the following liabilities is classified as current even if it will be settled beyond 12 months after the reporting date?

Notes payable for operating purposes Signup and view all the answers

What is the criterion for classifying a liability as non-current?

If none of the above criteria are met Signup and view all the answers