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- Financial notes
- 11. General accounting policies for financial instruments
- 11.5. Financial assets measured at amortized cost
11.5. Financial assets measured at amortized cost
Financial assets (debt financial assets) are measured at amortized cost, provided that both the following conditions are met:
- a financial asset is “held to collect”;
- the terms and conditions of an agreement concerning the financial asset give rise on specified dates to cash flows that are solely payments of principal and interest on the principal outstanding (the SPPI test is passed).
The Group classifies amounts due from banks, loans and advances to customers and debt securities as financial assets measured at amortised cost.
The carrying amount of this category of assets is determined using the effective interest rate described in the note „Interest income and expenses”, which is used to determine (calculate) the interest income generated by the asset in a given period, adjusting it for expected credit loss allowances.
Assets for which the schedule of future cash flows necessary for calculating the effective interest rate cannot be determined, are not measured at amortized cost. Financial assets recognized in this item are measured at amounts due, including interest on receivables, taking into account allowances for expected credit losses (see note „„Net allowances for expected credit losses”). Commissions and fees connected with the arising of or decisive for the financial qualities of such assets should be settled over the period of life of the asset using the straight-line method, and are included in commission income.