What is a Business Model? The business model test is about whether the asset is part of a group or portfolio that is being managed within a business model whose objective is to collect contractual cash flows from the non-equity financial asset (Amortised Cost), or to both collect contractual cash flows from the non-equity financial asset and sell the non-equity financial asset (FVOCI). Otherwise, the asset is measured at FVPL. What is a Business Model?
An entity’s business model for managing financial assets:
- reflects how financial assets are managed to generate cash flows
- is determined by the entity’s key management personnel
- does not depend on management’s intentions for individual instruments but is