Question

Select the investment accounting approach with the correct valuation approach: Not Held-for-Collection Held-for-Collection (a) Amortized cost Amortized cost (b) Fair value Fair value (c) Fair value Amortized cost (d) Amortized cost Fair value

Short answer

Correct option is Option (c).

Step-by-step solution

Definition of IFRS

International financial reporting standard (IFRS) is the group of rules and regulations that regulate and define how the transaction is reported in the company's financial statements.

An explanation for the correct option

In the case of the debt investment under the IFRS, investments that meet the business model and cash flow test are considered the investment held for collection. This investment is valued at an amortized cost. While the debt investment, which does not meet the cash flow test, is then considered not held for maturity and valued at fair value.