Classification of Financial Liabilities

Financial Liabilities are classified as Amortized cost category usually unless it is a derivative or a liability held for trading purpose. Entities have an option to designate a financial liability at fair value by exercising the ‘Fair Value Option’ choice which is...

Business Model Test

The investors’ key management personnel determine the business model, as defined in Ind AS 24 ‘Related Policy Disclosures’. The following factors should be considered while determining the business model objective: The business model does not depend on the...

Effective Interest Rate [EIR]

The EIR is calculated at initial recognition of a financial asset or a financial liability. It is the rate that exactly discounts estimated future cash payments or receipts through the expected life of the financial instrument to the gross carrying amount of the...

SPPI Test

Solely Payments of Principal and Interest (SPPI) Test: An entity should assess whether contractual cash flows are Solely Payments of Principal and Interest (SPPI) on the principal amount outstanding for the currency in which the financial asset is denominated....