Last Updated on 23/02/2021 by 75385885
At initial recognition and measurement a financial asset (subsequently) measured at amortized costs is measured at fair value plus directly attributable transaction costs.
A financial asset is classified as subsequently measured at amortised cost if (IFRS 9 4.1.1):
- 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 (the SPPI test);
- is held within a business model (business model test) whose objective is to hold financial assets in order to collect contractual cash flows (Hold to collect); and
- the financial asset is not designated at initial recognition as a financial asset at fair value through profit or loss (fair value option) (IFRS 9 4.1.5).
The asset is measured at the amount recognized at initial recognition minus principal repayments, plus or minus the cumulative amortization of any difference between that initial amount and the maturity amount (using the effective interest method), and any loss allowance (impairment). Interest income is calculated using the effective interest method and is recognized in profit and loss.
Foreign exchange gains or losses are recognised in profit or loss.
On derecognition of a financial asset gains or losses are recognised in profit or loss.