Financial asset should be measured at amortized cost if the following criteria are met

Financial asset should be measured at amortized cost if the following criteria are met:

Select one:

a. The financial instrument is managed within a business model aimed to trade it and the cash flows of the instrument have characteristics similar to reimbursements of principal and interest payments

c. The financial instrument is managed within a business model aimed to collect the cash flows rather than to trade it and the cash flows of the instrument do not reflect only payments of principal and interest

Solutions

Expert Solution

b. The financial instrument is managed within a business model aimed to collect the cash flows rather than to trade it and the cash flows of the instrument have characteristics similar to reimbursements of principal and interest payments

Amortised cost
a financial asset is measured at amortised cost if both of the following conditions are met:

the asset is held within a business model whose objective is to hold assets in order to collect contractual cash flows; and

the contractual terms of the financial asset give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding.

Junaid answered 1 year ago

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