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Hi,
I have taken this from the SBR Technical article – Using the business model of a company to help analyse its performance.
It states: “To qualify for an amortised cost classification, the financial asset must be held to collect contractual cash flows rather than be held with a view to selling the asset to realise a profit or loss. For example, trade receivables held by a manufacturing entity are likely to fall within the ‘hold to collect’ business model if the trade receivables do not contain a significant financing component in accordance with IFRS 15 Revenue from Contracts with Customers”
Don’t seem to understand what it means ” if the trade receivables do not contain a significant financing component in accordance with IFRS 15 Revenue from Contracts with Customers”
Could you please explain?
Many thanks
This would be very rare
An example would be a store that offers four years interest free credit.
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