Which statement is correct about accounting for financial instruments?

• A) All financial instruments are accounted for at fair value through profit or loss.
• B) All financial instruments are accounted for at amortized cost.

O C) All financial instruments are accounted for af fair value through OCl.

D) All are accounted for in accordance to their economic substance.

2. Which statement best describes the "incremental method"?

• A) Under this method of accounting, for a convertible bond, the issuing entity would record a liability for the estimated value of the bond without the conversion feature.
• B) Under this method of accounting, the common share component is considered the most reliably measured amount.
• c) Under this method of accounting, for a convertible bond, an estimate would be made of the fair value of all components and allocated proportionally to all components.
• D) Under this method of accounting, for a convertible bond, all of the bond value would be counted as a liability.

• 3. Which statement best explains the accounting for compound instruments?
  • A) Once separated, each component is accounted for at fair value with changes recorded through income.
  • B) Once separated, each component is accounted for at amortized cost.
  • C) Once separated, each component is accounted for at historical cost.
  • b) Once separated, each component is accounted for in accordance with its substance.
  • 4. Which statement is correct about the accounting for employee stock options?
    • A) The expense is recorded immediately upon grant date.
    • B) The expense is recorded over the period of vesting.
    • C) The expense is recorded over the period to expiry.
    • D) No expense is recorded for accounting purposes.