A financial instrument that constitutes a debt issued by an entity, as a liability, (and hence it is held by others) or held by the entity (as an asset) for the objective of collecting the contractual cash flows (and/ or to sell it prior to its contractual maturity to realize any changes in its fair value). Furthermore, the contractual terms of the instrument allow the holder, on specified dates, to receive cash flows that consists of repayment of principal and payments of interest on the principal amount outstanding.
If held solely to collect contractual cash flows (and unless it is designated at fair value through profit or loss (FVTPL), the instrument is measured at amortized cost. And if held for both collecting of contractual cash flows and selling it prior to maturity, the instrument is measured at fair value through other comprehensive income (FVTOCI).
Comments