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    Question

    An insurer holds a bond portfolio to collect contractual

    cash flows; the assets are sometimes sold to manage duration risk, though not frequently. Cash flows are solely payments of principal and interest. What is the most appropriate measurement category?
    A FVTPL Correct Answer Incorrect Answer
    B FVOCI Correct Answer Incorrect Answer
    C Amortized Cost Correct Answer Incorrect Answer
    D Historical Cost Correct Answer Incorrect Answer
    E FV through Equity, never recycled Correct Answer Incorrect Answer

    Solution

    Business model “hold to collect” with SPPI qualifies for amortized cost despite infrequent sales.

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