CAF-6 · Chapter 2 · Question 5 of 15
Gamma Inc manages a portfolio of bonds where the business model objective is achieved by both collecting contractual cash flows and selling the bonds. The cash flows meet the SPPI test. Assuming no accounting mismatch exists, how should these bonds be classified?
Test yourself: pick an answer
Reveal answer & explanation
Correct answer: B) Fair value through other comprehensive income (FVOCI)
Explanation
Debt instruments held within a business model whose objective is achieved by both collecting contractual cash flows and selling the assets, and which pass the SPPI test, are classified at FVOCI.
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