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The contractual terms of the financial asset give rise to cash flows that are solely payments of principal, and interest on the principal amount outstanding.
sir one of the conditions for recognising an investment in debt instrument at amortised cost or FVOCI is the above one. But i don’t understand two things with regards to it.
One, why is this there? What is the purpose for its inclusion. Just find this statement too absurd.
Two, can you think of examples other than convertibles that breach the rule?
Three, an investor will recognise its investment in convertibles using FVPL, since it breaches the contractual cash flow test?
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