Question -
1. It has been established that financial assets are to be measured at fair value at transaction date, and thereafter to be recorded at either fair value or amortised costs. According to NZ IFRS 9, one issue to be considered is how to account for any gains in financial instruments measured at fair value. Explain.
2. Describe the three types of hedges identified in NZ IAS39 and for each type of hedge, elucidate how gains and losses on the hedging instrument are to be treated for accounting purposes. Support your answer with a relevant example.
3. Describe the consequences for reported profit or loss if a particular financial instrument (for example, a preference share), is selected as debt rather than equity?