IFRS 9 presents three principal measurement categories for financial assets:
- Financial assets valued at amortised cost, Classification of financial assets
- Financial assets valued at fair value through other comprehensive income,
- Financial assets valued at fair value through profit or loss. [IFRS 9 4.1, IFRS 9 3.1.1]
A financial asset is classified into a measurement category at inception and is reclassified only in rare circumstances.
The assessment as to how an asset should be classified is made on the basis of both the entity’s business model for managing the financial asset (see the business model tests) and the contractual cash flow characteristics of the financial asset (the SPPI tests, see Solely Payments of Principal and Interest).… Read more