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Under Ind AS 109, a financial asset can be subsequently measured at AMORTISED COST only when:
AIts fair value cannot be reliably measured
BIt was acquired before the entity adopted Ind AS
CIt is held within a hold-to-collect business model AND its contractual cash flows are solely payments of principal and interest (SPPI)
DIt is non-derivative and has a fixed maturity date
Answer & Solution
Correct answer: C. It is held within a hold-to-collect business model AND its contractual cash flows are solely payments of principal and interest (SPPI)
Para 4.1.2 — amortised cost requires BOTH conditions: (a) hold-to-collect business model AND (b) SPPI cash flows. FVOCI requires hold-to-collect-AND-sell + SPPI. FVTPL is the residual (or designated, or held-for-trading).
Related questions
Under Ind AS 109, a debt instrument with a HOLDER-PUT or ISSUER-PREPAY option meets the SPA financial institution holds assets to meet LIQUIDITY needs in a stress-case scenario. ThA loan pays an INVERSE FLOATING interest rate (the rate moves opposite to market interest An entity holds short-term investments to fund a future capital expenditure. Sales are INFUnder Ind AS 109, the FAIR VALUE OPTION (designating a financial asset at FVTPL at initialA perpetual instrument can be called by the issuer at any time at par + accrued interest. A bond is CONVERTIBLE into a fixed number of equity instruments of the issuer. Under Ind AA bond's principal and interest payments are LINKED TO AN UNLEVERAGED INFLATION INDEX in t