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Financial Instument held at amortised cost

Forums › Ask ACCA Tutor Forums › Ask the Tutor ACCA SBR Exams › Financial Instument held at amortised cost

  • This topic has 1 reply, 2 voices, and was last updated 7 years ago by P2-D2.
Viewing 2 posts - 1 through 2 (of 2 total)
  • Author
    Posts
  • September 4, 2017 at 9:09 am #405277
    saqlainrattansi
    Member
    • Topics: 93
    • Replies: 98
    • ☆☆

    Hey Chris,

    Really hope you get around to clear up these last minute questions

    I was wondering, tests to hold a financial asset at amortised cost is the business model test and cashflow test

    For the business model test, I know that it would not be contradicted if the entity sold its fin. assets when its cashflows got bad

    My question is, in what other circumstance would the business model test not be contradicted?

    I have a question which mentions that the business may sell its fin.assets if other investments with higher returns become available.
    In my opinion, this would invalidate the business model test and hence the asset has to be held at FV through P&L right?

    September 4, 2017 at 5:34 pm #405459
    P2-D2
    Keymaster
    • Topics: 4
    • Replies: 7163
    • ☆☆☆☆☆

    Hi,

    The business model is when there is intent to hold the instrument to collect the contractual cash flows. Given that we may not hold it to collect the contractual cash flows then it would not be held at amortised cost.

    Thanks

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