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Debtors are financial asset because entity has contracutal right to receive cash. I understand this.
So is it measured at amoritsed cost or FVTOCI?
Because debtors dont generate income and im kinda confused.
Thank you in advance.
Hi,
They are measured at amortised cost as the meet the criteria, but you very rarely see them measured in any detail other than to recognise the amounts to be received as they are settled in a short period of time and there is no interest on the amounts owed.
If the receivable is due over a longer period, say more than one year, then you would see more of the amortised cost treatment as it would be discounted back to present value to give the fair value and then the interest applied to the outstanding balance.
Thanks
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