CAF-6 · Chapter 2 · Question 9 of 15
Zeta Ltd holds an investment in debt securities measured at amortised cost. Which rate is used to calculate the interest income recognized in profit or loss for this instrument?
Test yourself: pick an answer
Reveal answer & explanation
Correct answer: B) The effective interest rate
Explanation
Subsequent measurement at amortised cost involves calculating interest income using the effective interest rate (often described as the internal rate of return).
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