Accounting · Financial Instruments (Ind AS 109)
A bank is transitioning to Ind AS 109. For its investment portfolio, it must classify assets based on the bank's Business Model for managing financial assets and the Solely Payments of Principal and Interest (SPPI) test. Which of the following statements is correct?
Verified Solution4 OptionsUpdated: October 2026👁️1 View
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- 1If the business model is 'Hold to Collect and Sell', the asset must be measured at Fair Value Through Profit and Loss (FVTPL) regardless of SPPI status.
- 2If the asset is an equity (share) investment, it can be measured at Amortized Cost if held for the long term.
- 3If the business model is 'Hold to Collect' and the SPPI test is passed, the asset must be measured at Amortized Cost.✓
- 4If the business model is 'Hold to Collect' and the SPPI test fails, the asset must be measured at Fair Value Through Other Comprehensive Income (FVTOCI).
Correct answer
If the business model is 'Hold to Collect' and the SPPI test is passed, the asset must be measured at Amortized Cost.
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