ExpertACCA · Question 07 · Financial Reporting
Section A
LendTech Co operates a peer-to-peer lending platform. It holds a portfolio of debt instruments. The business model is to hold these assets to collect contractual cash flows, but LendTech will also sell them if a good opportunity arises to fund new platform development. The contractual terms of the assets give rise on specified dates to cash flows that are solely payments of principal and interest.
Under IFRS 9 Financial Instruments, which TWO of the following statements are correct regarding the classification and measurement of this portfolio?
Section A
LendTech Co operates a peer-to-peer lending platform. It holds a portfolio of debt instruments. The business model is to hold these assets to collect contractual cash flows, but LendTech will also sell them if a good opportunity arises to fund new platform development. The contractual terms of the assets give rise on specified dates to cash flows that are solely payments of principal and interest.
Under IFRS 9 Financial Instruments, which TWO of the following statements are correct regarding the classification and measurement of this portfolio?
Answer options:
The assets must be measured at Amortized Cost.
The assets should be measured at Fair Value Through Other Comprehensive Income (FVTOCI).
Interest revenue is calculated using the effective interest method and recognized in profit or loss.
All fair value changes are recognized directly in profit or loss.
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