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Financial Instruments

Forums › Ask ACCA Tutor Forums › Ask the Tutor ACCA SBR Exams › Financial Instruments

  • This topic has 1 reply, 2 voices, and was last updated 9 years ago by P2-D2.
Viewing 2 posts - 1 through 2 (of 2 total)
  • Author
    Posts
  • July 14, 2016 at 11:00 pm #325932
    nari
    Member
    • Topics: 261
    • Replies: 176
    • ☆☆☆

    Hello, regarding IFRS 9 and being measured at amortisation cost, the standard says the following:

    4.1.2 A financial asset shall be measured at amortised cost if both of the
    following conditions are met:
    (a) the financial asset is held within a business model whose objective
    is to hold financial assets in order to collect contractual cash flows
    and
    (b) 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.

    My question is, what exactly is the difference ? they both mention a cash flow into the business.

    July 24, 2016 at 10:07 pm #328718
    P2-D2
    Keymaster
    • Topics: 4
    • Replies: 7180
    • ☆☆☆☆☆

    Hi,

    The first is with regards to the intent to hold the financial assets until its maturity date when we receive the final cash flow.

    The second is with regards to there being contractual cash flows over the instrument’s life.

    Thanks

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    Posts
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