IFRS 9Chapter 5Lesson 2
The contractual cash flow test (SPPI): a basic lending arrangement?
Step 1 of 7Learning objectives
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The SPPI test checks that an asset's cash flows are solely principal and interest on the principal outstanding; an asset that fails the test is measured at FVTPL, whatever the business model.
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Learning objectives
- Define principal and interest within the meaning of the test.
- Spot a clause that exposes the cash flows to a risk foreign to a basic lending arrangement.
- Apply the test step by step and deduce the measurement category.
- Place modified time value, prepayment and non-recourse assets.