CAF-6 · Chapter 2 · Question 14 of 15
Omega Corp evaluates a new debt investment to determine its classification. It notes that the contractual terms give rise on specified dates to cash flows that are solely payments of principal and interest. This evaluation is commonly known as:
Test yourself: pick an answer
Reveal answer & explanation
Correct answer: B) The SPPI test
Explanation
The requirement that contractual cash flows represent solely payments of principal and interest on specified dates is known as the SPPI test.
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